There have been reports that a few lenders and some bidders have objected to promoters bidding for their own stressed accounts. “Ethical..I don’t know, but legally they are within their rights to participate,” SBI Chairman Rajnish Kumar told reporters here on Monday.
Last week, Essar Group submitted expression of interest for Essar Steel, which is going through insolvency process. “The Essar Group has submitted EoI for Essar Steel. A resolution plan will be submitted to the IRP (independent resolution professional) within the scheduled time frame,” an Essar Group spokesperson had said. Kumar said there is no concern about bidding by existing promoters as there are certain qualification criteria kept by lenders for them to bid.
“There will be a few preconditions from creditors. One is that they should not be wilful defaulters and the second is that a forensic audit should clear them of any wrong doings. The third is about the quality of resolution plan they submit,” the chairman said on the sidelines of the annual national banking summit organized by the industry lobby Ficci. Kumar further said the effort to bring in a new promoter is to enhance the enterprise value of the stressed asset, and anybody who gives the maximum enterprise value, that is in the interest of the enterprise itself, will be accepted to the lenders. “We’ve already drawn the baseline under which there is no place for a wilful defaulter or people who have diverted funds, as proved by the forensic audit.
But otherwise if law permits that existing promoters to participate then we can’t help it. It is very much there and we have to abide by the law,” Kumar explained. In June, an RBI committee had asked lenders to refer 12 large stressed accounts to the National Company Law Tribunal (NCLT) for resolution under the bankruptcy code.
The combined debt of these accounts was close Rs 2.4 trillion. Then in September referred another 28 largest defaulting accounts to the NCLT. Some of the accounts include Bhushan Steel, Essar Steel, Bhushan Power, Lanco Infra, Amtek Auto among others. Kumar said the resolution process under NCLT is running as per the time and if at all some additional time is required, it will be within the 270 days. He further said there has been good expression of interest for the steel sector in particular.