Skip to main content

Lenders want extension of insolvency deadline

Lenders want extension of insolvency deadline
If debt resolution is not finalised by December 13 for the 28 companies, insolvency proceedings will kickoff
The Indian Chamber of Commerce (ICC) has written to RBI Governor Urjit Patel, requesting an extension of the deadline to March 31, 2018.
Since the IBC is a new code and there are more than 300 accounts under the IBC in the NCLT without a resolution so far, banks should get more time for debt resolution outside the IBC to avoid risks of liquidation and plant closure with consequent unemployment, according to the chamber.
“The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, has also been recently issued on November 23, 2017, which is likely to delay the resolution of exposures above Rs 5,000 crore already under the IBC till April 2018 and it would be prudent to refer further cases to NCLT only after there is clarity on resolution of the existing cases,” the ICC letter added.
Based on the recommendations of the Internal Advisory Committee, the RBI had recommended 12 large accounts for immediate resolution under the IBC. Currently, these accounts are going through insolvency.Companies on the second list said right now there was no benchmark for the lenders. “If the resolution of the 12 large accounts happened then, there would have been some kind of a direction for the smaller ones that are on the second list.
Most of the non-binding bids have been extended and may just happen in January so a complete resolution will take place only in end-March or April. So there is no reason why the deadline for NPAs with debt below Rs 5,000 crore can’t be extended,” said the promoter of one of the companies. The government has come up with an Ordinance that practically debars promoters from reacquiring their assets.
Also, with so many issues under litigation, including the Ordinance, lenders don’t want to move ahead without clarity and deal with these cases, the companies say. Lenders, in the mean time, are exploring options like onetime settlements or sale to asset reconstruction companies
“Once the cases are admitted to the NCLT, provisioning requirement will go up substantially,” the head of a public sector bank said. As of now, of the 30 companies, around 10 were prepared to submit resolution proposals, said sources close to the development.

The Business Standard, New Delhi, 11th December 2017


Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Firms with sales below Rs.50 crore out of ambit

The tax department has reiterated that the PoEM rules, which require foreign firms to pay taxes in India if the effective control is here, will not apply to companies withaturnover of Rs.50 crore or less inafinancial year. Last month, the tax department had come out with the longawaited Place of Effective Management (PoEM) rules, which require foreign companies in India and Indian firms with overseas subsidiaries to pay local taxes if their businesses are effectively controlled by Indians. Then the rules did not setathreshold above which they were to apply. However, the accompanying press release states that the rules will not apply to companies withaturnover of up to Rs.50 crore inayear. That created confusion whether the threshold will be adhered to. Inacircular to clarify things, the Central Board of Direct Taxes (CBDT) said the provision "shall not apply toacompany havingaturnover or gross receipts of ~50 crore or less inafinancial year".

PoEM rules essentially target shell …