Skip to main content

NCLT Bench quashes 75 percent vote requirement

By
NCLT Bench quashes 75 percent vote requirement
In a trend setting order, the bench here of the National Company Law Tribunal (NCLT) has struck down an attempt byagroup of banks to block an insolvency resolution plan by citing the 75 per cent vote share requirement prescribed under Section 30(4) of the Insolvency and Bankruptcy Code (IBC).
The bench of judicial member Rajeshwara Rao Vittanala and technical member Ravikumar Duraisamy approved a one time settlement (OTS) as agreed to by Kamineni Steel &Power,a Hyderabad based corporate debtor, as part of a resolution plan cleared by a group of creditors with 66.67 per cent voting power.
Speaking to Business Standard on the verdict,VK Sajith, an advocate for Indian Bank that had backed the resolution plan, with four other lenders, said the bench had gone beyond only the interests of corporate debtor and corporate creditors, as the plan involved possible rehabilitation of 450 workers.
Indian Overseas Bank, Central Bank of India and Bank of Maharashtra, with a combined 29.12 percent voting power, had resisted the resolution plan, citing the 75 per cent vote share clause.
The bench rejected this."The dissenting bankers appear to have been guided by 75 per cent as prescribed under Section 30(4), rather than any policy or Reserve Bank of India (RBI) guidelines in that regard. Section 30(4) merely states that the Resolution Plan may be approved byavote not less than 75 per cent of voting share of the financial creditors.

It did not say whether such percentage is out of the total voting share of the financial creditors or those present during meetings of the respective COC (committee of creditors) of financial creditors.Since the IBC isanew Code and still evolving, the above percentage has to be read with various circulars issued by RBI, regulator for the banking sector,” the bench said ina100page judgement.

The registry was told to sendacopy of the order to the RBI governor.The bench approved the OTS presented by the Resolution Professional, based on the consent of five financial institutions —Indian Bank, JM Financial Asset Reconstruction Company, Allahabad Bank, Andhra Bank and Oriental Bank of Commerce.
Kamineni had shut down the operations of its plant in Nalgonda district of Telangana, owing to financial and other difficulties.
The Business Standard, New Delhi, 7th December 2017

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more