CNBCtv18: NCLT admits HDIL for IBC proceedings

20 August 2019: Housing Development and Infrastructure Limited (HDIL) has informed the Bombay Stock Exchange that it has been admitted under the provisions of the Insolvency Bankruptcy Code (IBC) in National Company Law Tribunal (NCLT).

It has also stated that the company will approach the National Company Law Appellate Tribunal (NCLAT) against the order passed by NCLT.

It’s noteworthy that Bank of India filed petition under Section 7 of IBC to initiate insolvency proceedings against HDIL.

The NCLT on June 4 had warned given HDIL four weeks time to pay Rs 98 crore to Bank of India and warned the company that faliure to do so would initiate insolvency proceedings.

Mumbai-based HDIL owes Bank of India (BoI) approximately Rs 520 crore and had agreed to pay its lenders in tranches.

HDIL, as per its 2017-18 annual report, has a total debt of around Rs 2,400 crore.

HDIL’s stock price fell four percent today and it’s currently valued at Rs 10.87 per share on BSE.

As reported by CNBCTV18

ET: SC stays appellate tribunal’s order in RCom OTSC Case

20 August 2019: The Supreme Court on Monday stayed an appellate tribunal’s order which had stalled the telecom department’s demand for Rs 2,000 crore from Reliance Communications (RCom) as one-time spectrum charges (OTSC), an order which may have wider ramifications for the broader industry.

“Currently, SC has granted an interim stay of the TDSAT judgement. It is subject to the outcome of the full and final hearing of all the operators,” said an RCom official.

This implies that RCom may have to provide bank guarantees worth Rs 2,000 crore, under the Department of Telecommunications (DoT) demands, said lawyers. But RCom said it can’t pay anything since it is in the midst of insolvency proceedings. “Aircel and RCom, both are in the NCLT / IBC, where DoT is an operational creditor, and both the companies are in the moratorium period,” explained the RCom official.

Sources in the DoT also admitted that despite the latest order, it will be difficult to recover the money from RCom, now that it is under insolvency proceedings. The one-time spectrum charges are dues towards payment of market-linked prices for excess spectrum held by a telco and have been a contentious issue between the operators and the government.

The DoT has raised demands against all telcos such as Vodafone Idea and Bharti Airtel, but all such demands have been stayed by the TDSAT. The DoT has also challenged all such orders in the SC, whose latest order on RCom may have a bearing on the OTSC demands against the other telcos, said an industry official.

“OTSC demands are an industry issue and these demands are pending for since 2013,” said the official.

RCom is the second telco to go under insolvency and all its payments are under moratorium till the resolution professional (RP) — Deloitte — completes its asset monetisation.

RCom has Rs 46,000 crore of debt. As many as 39 financial creditors have claimed about Rs 49,193 crore from the company. RCom and its units also have hundreds of operational creditors and DoT is one of them.

The Economic Times reported

ET: Lanco Thermal Power gets financial claims worth Rs 24,000 crore

20 August 2019: Lanco Thermal Power, the holding company for investments in thermal power plants by Lanco Group, has received financial claims of Rs 24,000 crore, said two people with direct knowledge of the matter.

Among the 15-20 lenders to the company are Andhra Bank, ICICI Bank, Axis Bank, Canara Bank, and IDBI Bank, sources said. The NCLT’s Hyderabad chapter admitted the case for insolvency proceedings on May 9 this year. Andhra Bank moved the petition under the Insolvency and Bankruptcy Code.

Parveen Bansal, designated partner of Delhi-based AAA Insolvency Professionals LLP, was appointed the resolution professional. Bansal confirmed the quantum of financial claims to ET. Emails sent to individual lenders remained unanswered. Axis Bank declined to comment.

About 99% of the claims have been submitted by banks/financial institutions marked as indirect lenders, which extended loans to holding, subsidiary and associate companies. Most of these companies are undergoing insolvency process or are under liquidation. Direct lenders, with 1% of the claims, loaned funds to the holding company.

“The corporate debtor secured these loans by extending corporate guarantee or by pledge of share investments,” an executive linked to the resolution process said. Lanco Thermal Power also invested in a 10MW hydel plant located in Himachal Pradesh.

With no single bidder officially submitting any interest to buy all the assets, lenders may have to wait for liquidation to receive their dues. Bids were sought on July 24. “Preliminary interest has been shown by investors for submission of expression of interest. Nothing can be said at this stage about their seriousness for investments,” Bansal told ET.

The Economic Times reported

FE: Monnet Ispat: NCLAT rules against operational creditors

20 August 2019: The National Company Law Appellate Tribunal (NCLAT) on Monday ruled against operational creditors of Monnet Ispat and Energy, appealing the committee of creditors’ (CoC) decision to award them only Rs 25 crore against claims Rs 444 crore. The company’s operational creditors, including Bharat Petrosources, GAIL India and Bharat Heavy Electrical, had approached the appellate tribunal earlier this year.

A plea filed by Industrial Financial Corporation of India (IFCI), a financial creditor, against treating of its secured loans as unsecured debt was also dismissed by the NCLAT. Monnet Ispat owes IFCI around Rs 158 crore.

Monnet Ispat’s CoC had assigned a nil liquidation value to BHEL’s Rs 15 crore claims, while claims of Bharat Petrosources’ stand at `19 crore.

BHEL contended that though the minimum value to be provided to operational creditors in a resolution plan is the liquidation value due to operational creditors, it cannot be limited only to the liquidation value. “…thus, prescription of liquidation value as minimum amount to be given to operational creditors can in no way be construed to mean that the operational creditors at all times shall be provided with only liquidation value,” BHEL had said in its petition.

The Insolvency and Bankruptcy Code was amended last month to empower the CoC to have the finaly say on the distribution of funds to various classes of creditors. It may be recalled that in the Essar Steel case, the NCLAT had ruled the operational creditors should get a larger share of the proceeds, than had been given to them by the CoC, thereby negating the CoC’s decision.

Under the IBC’s waterfall mechanism, in the event of liquidation, dues to secured financial creditors and workmen’s wages are to be paid fully before payments are made to unsecured financial creditors and operational creditors. The financial creditors of Monnet Ispat & Energy had taken a huge 74% haircut when in July 2018, the Mumbai bench of National Company Law Tribunal approved a `2,875-crore proposal by the AION-JSW Steel consortium. Monnet Ispat owed lenders Rs 11,000 crore while the liquidation value of the distressed steel manufacturer was pegged at Rs 2,365 crore.

Section 30 (2) of the IBC says payments of debts ofoperational creditors should be made in such a manner as specified by the board.

Monnet Ispat is among the major stressed assets from the first list of the Reserve Bank of India (RBI) which were taken up under the resolution process in 2017.

The Financial Express

FE: Resolution plan: Bankers want Kapil Wadhawan to step down from DHFL

20 August 2019: Bankers have proposed in the resolution plan that Kapil Wadhawan should step down as chairman and managing director of the cash-strapped Dewan Housing Finance Corporation Ltd (DHFL) and that his existing stake be brought down to below 10%.

The resolution plan, which is still being worked upon and awaits final nod from all categories of lenders, wants the existing management to step away.

As per the resolution plan, the promoter would also be required to pledge a part of their remaining stake to lenders (which would be below 10%), a banker close to the developments told FE.

Promoter group holding in DHFL is 39.21%. Only last month, mutual funds had refused to take an out-of-turn haircut. In case of insolvency proceedings, losses are apportioned between equity shareholders, preference shareholders, perpetual-Tier-II bond holders and unsecured lenders. After these four categories have apportioned the losses, then the secured lenders also end up taking a similar proportion of haircut.

While MFs are still awaiting the Securities and Exchange Board of India’s nod to become signitories to the the ICA, they insisted that the resolution plan should follow the law. Bankers are concerned that any possible legal action from MFs could be detrimental to the resolution process.

A banker aware of the developments said: “Lenders are very clear on wanting a change of management. In the immediate future, we have proposed that the promoter step down and banks take over operations until a new investor takes charge. As far as banks taking control is concerned, we are very comfortable with the idea.”

Other terms of the resolution plan include segregation of bad debt into a fresh entity or instrument. This so-called ‘bad’ debt—Slum Rehabilitation Authority loans and developer loans could get converted to an equity, or semi-equity instrument like Cumulative Redeemable Preference Shares (CRPS). Thereafter, part of the good debt within DHFL could also further get converted to equity from debt, the banker said.

“At the end, DHFL will largely be left with its retail portfolio and what is considered good quality business, which is also what most investors who have shown interest in the company are attracted to,” the source added.

It is unclear whether bankers have already in talks for a new investor, though it is largely understood these terms will be put forth to shareholders of the company in September.

The Financial Express reported