ET: Homebuyers can file claim even after resolution plan is passed: NCLT

7 August 2019: In a landmark judgement, National Company Law Tribunal (NCLT) has allowed submission of claims by home buyers even though the time period for submission has elapsed and resolution plan for an insolvent company has been approved by the committee of creditors (CoC).

The court gave the order in a case related to Appu Ghar Retail, a project which was being developed by International Recreation & Amusement in Sector 29, Gurugram. However, Corporate Insolvency Resolution Process (CIRP) was initiated against the company in August 2018 and Pramod Kumar Sharma was appointed as the Resolution Professional (RP).

As per regulations, last date for submission of claims was November 11, 2018. The claims were however accepted till April 25, 2019. The CoC approved the resolution plan, which was filed by HGAS Apex JV, on May 22, 2019.

“Many allottees of the real estate project missed the time line because they were unaware of the initiation of CIRP,” said Sowmya Saikumar, advocate representing a home buyer.

However when they reached the RP, it rejected the claims saying that final revised/amended plan has already been obtained from the resolution applicants and in order to provide crystallised information of liability to resolution applicants, the claims cannot be accepted.

One of the home buyers filed a plea in NCLT pleading that their claims be accepted. On hearing the matter, NCLT directed the RP to accept the claims.

“It is a respite to allottees of real estate projects who miss timelines because of being unaware of the initiation of insolvency process. Now their claims can be accepted even at a belated stage i.e. even after a resolution plan has been approved by CoC and pending adjudication before NCLT,” said Saikumar.

The Regulation No. 12 (2) of IBBI (CIRP) Regulations, 2016, provides a time limit of 90 days from the CIRP Commencement date to submit the claims.

The Economic Times reported

TOI: DHFL’s debt-resolution plan hard to accept, say lenders

7 August 2019: Troubled housing finance company DHFL has submitted a debt-resolution plan, which lenders have described as hard to accept. The reason is that the plan involves giving the borrower time to repay and more money to do business in the hope that future earnings will be adequate to repay loans without any haircuts. It does not have any concrete investment proposal from a new lender.

A banker said that there were several challenges in implementing a resolution plan for DHFL. Even if wholesale lenders like banks agreed to wait, there was a possibility that retail investors, mutual funds and provident funds would sue and derail the process. Lenders were not willing to provide DHFL loans merely to repay retail investors. They also want a change in the management in keeping with the principles of the Insolvency and Bankruptcy Code, even though the same is not applicable to finance companies.

According to the results filed by the company, as of March 31 this year, it had R 45,000 crore of debt securities outstanding, Rs 40,600 crore of borrowings and Rs 6,588 crore of deposits. Total liabilities stood at Rs 98,199 crore. The auditors had questioned the recoverability of thousands of crores of loans to developers. A big chunk of bonds are coming up for redemption in the October-December quarter, which the company — given its current financials — is unable to repay. On the stock exchange, the DHFL stock soared 32% to Rs 55 on hopes of the company getting back on track. However, many lenders do not share the market’s optimism as they said that any haircut should first be taken by shareholders.

The Times of India reported

ET: Brookfield no longer in race for Suzlon Energy stake as talks fail

7 August 2019: Brookfield’s plan to acquire a majority stake in Suzlon Energy has fallen through, after the Canadian investor could not reach a deal with the wind-turbine maker’s lenders on valuation, two people aware of the development said.

Lenders did not agree to the amount that Brookfield wanted them to forego to proceed with the deal, and are now working with Suzlon on other resolution plans, they told ET.

“Brookfield was interested in Suzlon only if the valuation was attractive,” one of the people said. “The haircut on loans that they were asking was not acceptable to banks.”

Brookfield had asked for a 60-70% haircut on the debt, a senior banker said, adding: “The deal with Brookfield is not happening.”

Emails to Suzlon and Brookfield seeking comment remained unanswered at press time Tuesday.

Suzlon, which has defaulted on loan repayments and has loans categorised as non-performing asset by lenders, was banking on a deal with Brookfield to resolve its stressed debt. In July, its secured creditors signed an inter-creditor agreement to resolve the debt crisis by working with the company. According to a central bank directive on June 7, such agreements must be signed within 30 days of the first default to any lender.

Lenders are working closely with the company to resolve the issue, the senior banker said. “There is still some time as per the inter-creditor agreement signed mid-July.”

On June 24, ET reported that Suzlon had offered a one-time settlement to its lenders. Shares of Suzlon closed 1.7% lower at Rs 4.25 on the Bombay Stock Exchange Tuesday.

The Economic Times reported

FE: Jet Airways’ creditors pass all resolutions

7 August 2019: The committee of creditors (CoC) of Jet Airways on Tuesday passed all resolutions, including the evaluation matrix for assessment of resolution applicants and request for resolution plan, the resolution professional (RP) of the airline said in an exchange filing.

The evaluation matrix has an array of parameters which will help the CoC decide the ideal resolution applicant. So far, the RP has received at least two expressions of interest on August 3, which was the initial deadline for submitting EoIs.

FE earlier reported that the EoI submission deadline had been extended till August 10 to give more time to Etihad Airways.

The RP held the second meeting of the CoC on August 1 to vote on the evaluation matrix and request-for-proposal for resolution plans for the defunct airline. The CoC had also discussed interim funding to pay salary dues of Jet Airways employees. However, banks were reluctant to consider the same.

Last month, the National Company Law Tribunal (NCLT) directed the resolution professional of Jet Airways to discuss concerns over payment of salaries with the CoC, citing necessity of ensuring payment for ‘survival of employees’.

On June 20, the NCLT initiated insolvency proceedings against the airline, following an application moved by the State Bank of India. In its order, the NCLT sought a speedy resolution for Jet Airways as it was considered a matter of “national importance.” While passing the order, Judge VP Singh urged that the resolution process should be completed within 90 days.

Jet Airways halted operations on April 17 after lenders refused to provide emergency funding. Since then, the ministry of civil aviation has re-allocated the Jet’s slots to other airlines on a temporary basis till October.

The Financial Express reported

FE: Adani, Haldia and Accord submit bids to revive Nagarjuna Oil Corporation

7 August 2019: The bankrupt Nagarjuna Oil Corporation (NOCL), which is under liquidation process after failing to find out a successful resolution plan, has recieved bids from three firms — Adani Ports and Special Economic Zone, Haldia Petrochemical and Accord Distillers and Brewers — to revive the company.

Nagarjuna Group said the bids were under scrutiny and verification, and liquidator would share the asset memorandum/valuation report to the bidders.

NOCL, which is setting up a 6 million tonne per annum (MTPA) petroleum and oil refinery project in Cuddalore in Tamil Nadu, had been ordered to undergo liquidation process after the company failed to get a successful resolution plan in the Corporate Insolvency Resolution Process (CIRP).

Subsequently, in December 2018, the National Company Law Tribunal (NCLT), Chennai, ordered liquidation of the company, which is an associate of Nagarjuna Oil Refinery (NORL).

However, considering the fact that the project could still go on if properly funded and managed, there was one more opportunity for the revival of the company through a scheme that has to be selected by the liquidator.

The liquidator had called for expression of interest (EoI) and to finalise a scheme submitted by interested company, after considering various aspects. IBC’s liquidation sections provide for a revival through a competitive bidding process on as is where is basis.

Haldia Petrochemicals and Gulf Petrochem were the two investors in the final round of resolution plan discussions earlier, but the proposals fell short of the liquidation value of `1,450 crore. There are around 15 lenders for NOCL.

The CoC, on April 19, 2018, rejected the resolution plan received from Haldia Petrochem as it offered the amount below the liquidation value. However, Haldia Petrochem and Gulf Petrochem filed application with the NCLT which directed the RP to submit their plans before the CoC.

The CoC asked Haldia Petrochemicals and Gulf Petrochem to improve their bids. However, in the lenders’ meeting held on July 24, the CoC members, in the case of Gulf Petrochem, opined that the net present value of the bid amount offered was far below the liquidation value and CoC was not in favour of the resolution plan submitted by Gulf Petrochem and with regard to the resolution plan of Haldia Petrochemicals.

Haldia Petrochemicals moved the NCLAT and its order. The appellate tribunal disposed of the appeal, giving the liberty to the company to submit a scheme in consonance with IBC. This paved the way for reviving NOCL even though it had gone into liquidation.

The Financial Express reported

FE: NCLT adjourns hearing on IL&FS ex-auditor’ asset freeze case to August 28

7 August 2019: The National Company Law Tribunal (NCLT) adjourned the hearing on the matter of freezing the assets of the former auditors of IL&FS, Deloitte Haskin & Sells and BSR & Associates, to August 28.

The tribunal on Tuesday heard the arguments of the ministry of corporate affairs for freezing the assets of Deloitte and BSR, following the impleadment of the two audit firms in the NCLT proceedings.

The ministry had on June 8 filed two applications – one for impleadment of the audit firms in the NCLT proceedings of IL&FS, and the second, for the freezing their assets following the impleadment order. On July 18, the NCLT passed an order to implead 23 additional respondents, including the auditors of IFIN, Kalpesh Mehta, Sampath Ganesh and Udayan Sen, in the IL&FS proceedings.

However, the tribunal on July 25 put a 10-day stay on its own impleadment order, allowing the auditors time to file an appeal with the National Company Law Appellate Tribunal (NCLAT). The NCLAT will hear the matter on August 19. The Mumbai bench of NCLT on Tuesday said that if the impleadment order is upheld by the appellate tribunal, the matter of the asset freeze will then be heard.

These applications for impleadment and asset freeze of the auditors were filed by the ministry of corporate affairs based on the findings of the Serious Fraud Investigation Office (SFIO) in the IL&FS fraud case.

The SFIO had on May 28 filed a criminal complaint based on its probe into the affairs of IL&FS fraud case. The report found that the auditors appeared to be hand-in-glove with the former top management of the group in concealing material facts and information from investors and creditors.

Following the SFIO findings, the corporate affairs ministry has also filed an application seeking to ban the two audit firms from conducting auditing activities for five years. The NCLT over the last month has heard arguments and reserved the order in the matter.

The financial affairs of the IL&FS group came into scrutiny last year after the group defaulted on short-term and long-term debt obligation worth `91,000 crore.

The Financial Express reported