Lenders To Miss March-end Deadline To Resolve Key Insolvency Cases

Indian lenders are set to miss the March-end deadline to resolve several key bankruptcy accounts, including that of Reliance Capital (RCap) and Videocon Industries. This is resulting in blockage of funds worth over Rs 1 trillion.

The banks were targeting to conclude the entire process by March-end so that they could resolve these accounts.

Other unresolved accounts include Future Retail, Lanco Amarkantak, Reliance Broadcast, and Srei Infrastructure Finance.

“Even though the higher bidder in some cases has been identified, it would be difficult to close the case in March due to litigation,” said a banker.

Once an account is settled with the highest bidder paying the bid amount, part of the bank’s locked fund in an account is freed and could be used for lending purposes.

Lenders said in Videocon Industries account, the claim worth Rs 63,000 crore is pending resolution with Twin Star Holding, a promoter entity of Vedanta group, making the highest bid of Rs 3,000 crore.

The case is pending in the Supreme Court after Twin Star appealed against a National Company Law Appellate Tribunal (NCLAT) stay on its offer.

The matter is pending in the apex court since January 2022.

In the Reliance Capital account, lenders are awaiting the fate of an appeal filed by the Torrent group against an NCLAT order, for a second auction.

Torrent emerged the highest bidder in the first auction with an offer of Rs 8,640 crore.

RCap was sent for debt resolution under IBC in November 2021 after it defaulted on loans worth Rs 24,000 crore.

Lenders are also seeking to sell land assets of Reliance Communications (RCom) in Navi Mumbai after their efforts to auction the company were marred by litigation.

Lenders had referred the company to bankruptcy court after it defaulted on loans worth Rs 45,000 crore.

Similarly, lenders with exposure of Rs 25,000 crore in Future group companies have started the bankruptcy process against Future Retail and Future Enterprises. They are planning to complete the process by September this year.

In the case of electricity generator Lanco Amarkantak, government owned PFC, REC, SJVN and DVC have made an offer of Rs 3,000 crore, outbidding Reliance and Adani groups.

Among the resolved cases, the National Company Law Tribunal (NCLT) cleared the acquisition of Jaypee Infratech by Mumbai-based Suraksha group, thus resolving dues of over Rs 23,000 crore.

Two long-pending accounts — Lavasa Corporation and Reliance Naval Defence were also resolved but with very low recovery for the banks.

Work in Progress

• Videocon Industries
• Future Retail
• Reliance Capital
• Lanco Amarkantak
• Srei Infrastructure