IT: Jet Airways pilots defer strike, request to meet SBI chairman

31 March 2019: Jet Airways pilots on Sunday deferred their strike scheduled for April 1. At a National Aviator’s Guild (NAG) meeting, pilots decided to State bank of India (SBI) management more time which is why the strike has been deferred to April 15.

“SBI management has come in just 6 days ago and yet to settle down. We wanted to give the new stakeholder fair chance. Adding to this our remaining salary for December was credited on Saturday. With the reports in media that SBI is trying to revive the company and assurance by CEO in writing, we have decided to defer the strike,” said Captain Karan Chopra, president NAG.

Adding to this, Jet Airways pilots have demanded to meet the SBI chairperson and hear the bank’s plan to revive Jet Airways.

“We request the SBI chairman to meet us and hear us out. This will give us clarity on future plans,” said Chopra.

NAG, which claims to represent around 1,100 of the total 1,600 pilots, last month announced its members will not fly from April 1 unless their pending salaries were cleared and there is clarity on future payments by March 31.

Jet Airways on Saturday said it will pay December salaries to pilots and aircraft maintenance engineers but for now cannot pay more recent overdue wages.

It was Jet Airways chief executive officer Vinay Dubey who had earlier sent the communication to pilots and engineers on Saturday that Jet Airways was unable to clear the remaining 3 months salaries of the staff immediately.

“The board of directors in the management team is working as fast as possible to implement a resolution plan agreed upon with a consortium of Indian lenders to install the much needed stability of a corporation to build a sustainable future for the airline,” the communication read.

Once India’s leading full service carrier, Jet struggled to compete with low-cost carriers in recent years. In the past few weeks, its chairman Naresh Goyal stepped down from the airline’s board and lenders stepped in to rescue the airline from the brink of bankruptcy.

India Today reported

BS: 75 firms have debt of Rs 2.24 lakh crore: Petitioners (NCLT Part IV– Power Cos Woes)

31 March 2019: As many as 34 power companies have accumulated Rs 1.4 lakh crore of NPA for Indian banks while 41 corporates across sectors, including those from infrastructure, textile, telecom, sugar, steel, energy, power and fertilisers have Rs 84,000 crore piled up NPAs which have taken the bad loan total to astronomical Rs 2.24 lakh crore, petitioners opposing RBI’s February 12 circular on resolutions of debts have submitted to the Supreme Court.

Quoting a report of the 37th Standing Committee on energy giving NPA details of 34 power plants, the petitioners said these plants which have number of banks ranging from 2-19, have accumulated over Rs 1.40 lakh crore . The power companies are seeking Supreme Court intervention in setting aside or quashing an RBI order of February 12 last year where the apex bank laid down strict norms for NPA resolutions within 180-days among other rules. 

“75 companies have a debt of Rs 2.24 lakh crore”, the petitioners stated. The RBI has already contested the claims of these corporates’s petitions saying 180 days is a reasonable period for achieving implementation of Resolution plan.

Power, shipping and sugar companies have challenged the Reserve Bank of India’s (RBI) February 12 circular which has identified about 30 companies, which have loans over Rs 2,000 crore and are stressed. Many of them were power companies and they have already challenged the RBI’s circular in various courts. 

Earlier this month RBI defended the February 12 circular, telling the SC that intention behind the circular was to give banks more powers in resolving stress and the 1-day default rule is to ensure banks & borrowers put a risk management framework in place. SC has reserved its verdict. 

The 1-day default rule of RBI states if a deafulter fails to pay even 1 day after the deadline of loan payment, then banks have to come up with a resolution plans and, if they don’t, approve the resoluion plan within 180-days, then the banks will have to take the company to insolvency. This rule was mostly criticised by companies.

The prominent corporates where payments are due are Adani Power Maharashtra (Rs 9,463.29 crore), Damodar Valley Corpora (Rs 9,756.42 crore), Jaiprakash Power Ventures (Rs 8,719.16 crore), KSK Mahanadi Power Company (Rs 14,165.12 crore), Jindal Thermal Power (Rs 5,594.21 crore), Prayagraj Power Generation (Rs 9,883.28 crore),  Jaiprakash Power Ventures (Rs 8,719.16 crore), GNR Chhatishgarh Energy (Rs 5,325.28 crore) and DB Power (Rs 5,930.56 crore) among a host of others. 

Among the consolidated NPA list of other corporates VOVL, an oil company having a 17-bank consortium of lenders owes Rs 21,657.54 crore to them. Matrix Fertiliser and Chemicals owes 11 bankers Rs 4135.12 crore. Essar Bulk Terminal, an infra company owes Rs 1,088.82 crore and Rolta India has a debt of Rs 3,400 crore. 

The new framework of RBI prescribed a strict 180-day timeline over which banks are required to unanimously agree on the resolution plan, failing which the stressed account would have to be referred for resolution under the Insolvency and Bankruptcy Code (IBC).

Power companies argued that the circular would push even power assets that were close to achieving loan restructuring in to insolvency.

Power ministry officials also spoke out against the February 12 circular seeking some relaxation in norms, especially with respect to the one-day default rule, attributing the stress in the sector to delayed payments by  electricity distribution companies of India (discoms), lack of power purchase agreements and irregular coal supply.

The Business Standard reported

CNBCTV18: Insolvency law’s objective is reorganisation of defaulting firms, not recovery: IBBI chief M S Sahoo

31 March 2019: Asserting that the insolvency law’s objectives are reorganisation and resolution of a defaulting company, IBBI Chairperson M S Sahoo said that if creditors recover their dues one after another or simultaneously, the company would bleed to death.

Significant amounts of recoveries have been made from defaulting firms since the implementation of the Insolvency and Bankruptcy Code (IBC) which provides a robust framework for market-driven and time-bound resolution process.

Sahoo, who is at the helm of the Insolvency and Bankruptcy Board of India (IBBI), noted that the code does not rule out recovery, but it must be incidental to reorganisation.

“Recovery should happen ideally from future earnings of the reorganised firm,” he told PTI in an interview.

As per various estimates, more than Rs 5 lakh crore has been the direct and indirect realisation on account of the IBC. Out of the total estimated amount, around Rs 2 lakh crore has been recovered before the cases were admitted for resolution under the code, while recovery through resolution plans is pegged at over Rs 1 lakh crore.

Sahoo emphasised that the code is for reorganisation and insolvency resolution of a defaulting firm.

“The objective is reorganisation and not recovery. If the creditors, one after another or simultaneously, recover their dues, the firm will bleed to death.

“The question is, does recovery facilitate reorganisation? If not, it is not contemplated in the IBC,” he said.

Around 12,000 cases have been filed since the implementation of the code and setting up of the National Company Law Tribunal (NCLT). Under the code, cases can be taken up for resolution only after approval from the tribunal.

Sahoo said that the committee of creditors (CoC) of a company undergoing insolvency proceedings should be guided by feasibility and viability of the plan and not how much the creditors are realising under the resolution plan or how the realisation is shared among different categories of creditors.

The code specifically tells what shall be considered while approving a resolution plan, he said, adding that to him, the key job of the CoC is to distinguish between a viable and an unviable firm.

“If it is a viable (company), it must be rescued, and it is the duty of the CoC to rescue it. If it is not viable, the CoC should allow its closure. If you rescue an unviable firm or close a viable firm, it is dangerous for the economy. The law expects the CoC, as an institution of public trust, to rescue a viable firm and allow closure of unviable one,” he said.

The CNBCTV18 reported

LM: NPA recovery target in jeopardy on Essar Steel

31 March 2019: The delay in actual realisation from the resolution of the big-ticket cases like Essar Steel has put the non-performing assets (NPAs), or bad loans, recovery target by banks of  1.8 lakh crore in jeopardy.

A section of the Finance Ministry, however, believes the target of  1.8 lakh crore could be deemed to have been achieved as the decision of National Company Law Tribunal (NCLT) on the sale of the Essar company to ArcelorMittal for  42,000 crore was taken in the current fiscal.

A senior ministry source said the public sector banks (PSBs) have recovered close to  1.33 lakh crore by the third week of March, leaving a gap of  47,000 crore in meeting this year’s target.

The achievement of  1.8 lakh crore mainly depended on the resolution of the Essar Steel insolvency case before 31 March, which has happend, but the distribution of the funds to financial creditors has not taken place as operational creditors have taken up the issue of their dues in the appellate tribunal (NCLAT).

Earlier NCLAT had directed the Essar Steel Committee of Creditors (CoC) to reconsider the distribution of 42,000 crore as announced by NCLT Ahmedabad, which had suggested a 85:15 distribution between the financial and operational creditors against the 90:10 ratio as proposed in the resolution plan.

The NCLAT was informed last week that a decision by CoC on the issue of whether StanChart, an unsecured financial creditor which had moved the NCLAT against the resolution distribution formulae, should get higher a payout for its dues from Essar Steel, is being discussed. The next hearing on the matter at NCLAT has been adjourned to 9 April.

Unsecured lender Standard Chartered Bank, which had made the highest claim of  3,400 crore, has been excluded from the offer. As per the plan submitted by ArcelorMittal, the bank will receive only 1.7%, or  60 crore, of its dues.

The total of claims admitted by the financial creditors in Essar Steel and Bhushan Power & Steel, the two big-ticket cases of the RBI’s first 12 list of NPAs, are 49,479 crore and  47,145 crore, respectively.

Earlier this month, NCLAT directed NCLT to decide on JSW’s bid for Bhushan Power & Steel by March 31 after dismissing the plea of Tata Steel. But this case also has not moved further and, so far, no decision has come from NCLT.

This has raised worries about the recovery from this case being pushed to the next financial year.

Earlier, the Department of Financial services officials had met the senior management of PSBs via video conferencing and reviewed the recovery target for 2018-19. The meeting discussed the recoveries made by PSBs through the Debt Recovery Tribunals (DRTs) and the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act), along with a presentation on the Insolvency and Bankruptcy Code by the Corporate Affairs Ministry. But the recoveries through SARFAESI and DBTs are not huge.

A Boston Consulting Group and Indian Banks’ Association joint report says that PSBs have recovered a total of  2.87 lakh crore between April 2014 and December 2018. They have recovered close to  80,000 crore from cases resolved under the Insolvency and Bankruptcy Code.

This story has been published from a wire agency feed without modifications to the text.

The LiveMint reported

ET: NBCC ready to buy more stressed realty assets

31 March 2019: State-run construction major NBCC is open to acquiring more distressed assets in the real estate sector, provided there are no corporate governance issues, chairman Anoop Kumar Mittal has said. NBCC has already bid for Jaypee Infratech, which is being resolved through the corporate insolvency process. 

“There are a few other projects where we have been approached. We are examining the commercial viability but we won’t take up projects where there are corporate governance issues,” Mittal said, refusing to name the projects the firm is interested in. 

NBCC has been directed by the Supreme Court to complete the stalled projects of Amrapali Group on the project management consultancy (PMC) model. After surveying all the projects of the group, the developer had informed the court that it would require Rs 8,500 crore to complete them. 

According to an executive aware of the developments, some banks have approached the state-run firm to take over assets of companies whose promoters are unable to service their loans. 

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“It may be the case that NBCC would take on other projects depending on how the negotiations go in case of Jaypee Infratech,” said the executive quoted above. 

Jaypee Infratech has an outstanding debt of about Rs 9,800 crore Some bankers said NBCC has offered to set up a special purpose vehicle (SPV) for acquiring a majority stake in the corporate debtor. 

“It (NBCC) has offered to pump upfront amount of Rs 500 crore (part equity and part debt) within 90 days of the approval date,” said a bank executive. 

The resolution plan offered by NBCC also proposes to give 1,400 acres, worth about Rs 3,000 crore, as well as the Yamuna Expressway highway to the lenders. 

“They have proposed that banks can raise about Rs 2,000 crore against the Expressway,” he added. 

In 2017, the NCLT had admitted the application of an IDBI Bank-led consortium seeking resolution of Jaypee Infratech’s debt under the Insolvency and Bankruptcy Code. 

NBCC expects to have an order book of Rs 95,000 crore. It recently acquired another state-run firm Hospital Services Consultancy Corporation (HSCC) for Rs 285 crore.

The Economic Times reported