Mumbai: Mumbai-based JM Financial Asset Reconstruction and banks including Axis Bank, IDBI Bank and YES Bank have approached the Mumbai bench of the National Company Law Tribunal (NCLT) to be included under the category of financial creditors.
The lenders are alleging that the resolution professional (RP) of the company is not accepting their claims since they had provided money against corporate guarantee provided by KSS Petron.
“KSS Petron is a construction company and each project they undertook, they had floated a special purpose vehicle (SPV) which had raised the funds. While doing so, KSS Petron used to give a corporate guarantee as collateral," argued Rohit Gupta who was appearing for JM Financial ARC. “Now, the RP is not accepting the claims."
Gupta further argued that the lenders are facing a double-edged sword. “If we invoke the corporate guarantee, that would not be possible because moratorium period is going on and if we don’t invoke the corporate guarantee, the RP will say that we have not made any claim," he added.
KSS Petron’s subsidiary had collectively borrowed around ₹ 500 crore from the lenders where it had furnished the corporate guarantees. Loan to KSS Petron was classified as a non-performing asset, in 2015.
After hearing arguments from the banks and JM Financial ARC, Presiding Officer M.K. Shrawat posted the matter for further hearing on 2 August.
“We have already filed our reply into the matter. The corporate guarantees were not invoked at the time of submitting the claims and hence we could not accept those guarantees," said Mohan Lal Sharma, the resolution professional of KSS Petron, while contacted.
Earlier in May, the lenders to Essar Steel had asked ArcelorMittal to clear the debt outstanding for two defaulting companies—Uttam Galva and KSS Petron—in which it was a large shareholder until recently.
Currently, ArcelorMittal India Pvt Ltd—which is vying for Essar Steel and which once owned shares in loan defaulter Uttam Galva as well as KSS Petron—has deposited ₹ 7,000 crore in an escrow account to qualify for the bidding. If NCLAT declares ArcelorMittal eligible, the money in the escrow account will go towards settling Uttam Galva’s debt.