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Bankers look for speedy resolution of 28 accounts

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Bankers look for speedy resolution of 28 accounts
Bankers are looking to speed up the resolution of 28 accounts including Videocon Industries BSE -4.90 %, Jaiprakash AssociatesBSE -1.67 % and Uttam Galva Steel as a December 13 deadline looms. These companies are part of the Reserve Bank of India's second list of defaulters to be referred to bankruptcy proceedings for recovery of more than Rs 2 lakh crore.
The accounts need to be restructured by December 13 or they'll end up in the National Company Law Tribunal (NCLT) for the next step in the insolvency process. At that point, banks will have to provide for losses of up to 50% of the loan value, hitting their earnings.Bankers said this worry may see the accounts of Jaiprakash Associates, Uttam Galva Steel, BILT and Jai Balaji getting recast by the deadline.
Also, in cases such as Ruchi SoyaBSE -1.55 %, Orchid Pharma and Uttam Galva Metaliks, lenders did initiate insolvency proceedings well before the deadline, they said.Senior bank officials said that among the 28 cases resolution is in the final stages for Jaiprakash Associates, while negotiations are on for Videocon Industries.
"These are two large cases in the second list and some lenders have asked for additional time from the regulator," said a senior bank official who did not want to be named.The industry is divided over whether lenders can decide on a resolution plan for Videocon Industries by December 13. Videocon Industries has to repay Rs 43,000 crore while Jaiprakash owes about Rs 26,000 crore.
In June, RBI directed banks to immediately refer 12 large cases to NCLT for resolution. In the last week of August, it released a second list of 28 companies but gave banks time to resolve the loans before resorting to the tribunal. However, if the banks fail to recast them by December 13, they have to refer the cases to NCLT by December 31, RBI said.
RBI also said that if a loan is restructured outside the Insolvency and Bankruptcy Code (IBC), the sustainable portion of the loan has to be qualified as investment grade by at least two rating agencies.
Resolution for Uttam Galva Steel, BILT, Jai Balaji, Jayaswal Neco, Soma Enterprise and Anrak Aluminium is either done or is in the final stages, bankers said. Lenders said that in some of these cases banks have either sold the loans to asset restructuring companies (ARCs) or settled them with the promoters. In the case of Soma Enterprise, lenders have restructured the loan under the S4A or Scheme for Sustainable Structuring of Stressed Assets.
Most lenders have sold loans of BILT and Jai Balaji to ARCs and lenders are in talks with buyers for Uttam Galva Steel.In other cases such as Nagarjuna Oil Refinery, Uttam Galva Metaliks, Orchid Pharma, Ruchi Soya and Unity InfraprojectsBSE 1.02 %, lenders have already initiated insolvency proceedings at NCLT.
The Economic Times, New Delhi, 11th Decmber 2017

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