BQ: Leaked Video of Chairman’s ‘Bankrupt’ Flub Sends Avianca to Record Low

27 August 2019: Avianca Holdings SA plunged to a record low after the Colombia-based airline’s chairman was seen in a leaked internal video telling employees that the company is “bankrupt.”

The stock dropped as much as 15% in Bogota trading before paring losses. Kriete was trying to reiterate to employees the urgency of getting back to profitability, said Carlos Enrique Rodriguez, head of equity research at Bogota-based brokerage Ultraserfinco. Instead, his comments wiped out more than $40 million of market capitalization, as the video surfaced on social media after markets closed yesterday.

The company quickly tried to qualify the statement, taken from a video in which Chairman Roberto Kriete is seated aside CEO Anko van der Werff at a company meeting, saying his message was taken out of context.

Kriete “used the colloquial term ‘bankrupt’”, though the company is not in any bankruptcy or insolvency process, the airline said.

A new management team, led by Kriete, who took over as chairman in May following a corporate shakeup, is attempting to turnaround the money-losing airline by cutting unprofitable routes, selling some assets and reducing debt.

The Bloomberg Quint reported

ET: NCLT asks Jayaswal Neco, SBI to furnish details of SC petition

27 August 2019: The dedicated bankruptcy court has asked Jayaswal Neco Industries Ltd and its lender, the State Bank of India (SBI), to give details about the petition filed by the company in the Supreme Court to stay the insolvency resolution proceedings.

On Monday, the Mumbai bench of the National Company Law Tribunal (NCLT) asked the company and SBI to furnish the details of the case and the Supreme Court’s latest stand on the subject matter.

“The case involves substantial sum and hence we want to know the current status of case,” said the bench presided over by MK Shrawat and Chandra Bhan Singh. “Both the parties have to submit the details of the Special Leave Petition (SLP), which has been filed, along with all the other relevant details by September 9.”

SBI had approached the tribunal in 2018 after the company failed to repay its dues. Nagpur-based Jayaswal Neco owes around Rs 518 crore to SBI and the company’s total debt is more than Rs 4,000 crore.

BSE-listed Jayaswal Neco is part of the so-called second list of RBI, where the regulator had directed banks to do mandatory resolution. The company had challenged the lender’s move to approach the NCLT against the company in the Bombay High Court. However, the high court had rejected the plea and later the company had challenged the high court’s order in the Supreme Court.

The company’s argument is that at the time of the February 12 circular of RBI, the lenders have already agreed for Master Restructuring Agreement (MRA) to restructure the loans of the company.

“Ten out of 12 lenders of the company, barring Oriental Bank of Commerce and IDBI Bank, with around 92% of the value had sanctioned the restructuring scheme,” argued the promoters.

The Economic Times reported

ET: Jet lenders extend deadline for expressions of interest, again

27 August 2019: The resolution professional (RP) and the committee of creditors appointed for Jet Airways has for the second time decided to extend the deadline for expressions of interest to August 31, said two people close to the development.

Also, lenders to Jet will put to a vote, a proposal to lend the bankrupt airline more money so that employee salary arrears can be cleared, the people added on condition of anonymity. The resolution professional for Jet, appointed by India’s bankruptcy court, had on August 3, extended the deadline for the first time to August 10.

“Lenders are happy to extend the deadline because then they will have at least two serious bidders to show in the NCLT. However, there is still some reluctance on lending more funds so it will be put to vote. The e-voting will most likely be done later this week,” said one of the person cited above.

The latest extension comes after South American conglomerate Synergy Group Corp, which owns a majority stake in airlines including Colombian carrier Avianca, expressed an exploratory interest to invest in Jet.

The communication from Synergy came after the first deadline of August 10, said a second person in the know. ET reported it on August 26.

The resolution professional had received three EoIs for Jet as of August 10 — from Volcan Investments, which is billionaire Anil Agarwal’s family trust; Panama-based investment firm Avantulo Group, and Russian Fund Treasury RA Creator. Volcan withdrew a day later and Avantulo wasn’t shortlisted for the next round of bidding, leaving the Russian fund as the only selected entity.

The resolution professional had sought to raise Rs 70 crore-80 crore for the airline but could only raise Rs 10 crore. It had earlier this week sought directions from the National Company Law Tribunal to seek additional funding for the committee of creditors.

The resolution professional was appointed by NCLT after it directed an insolvency process against Jet admitting a plea from its top lender State Bank of India on repeated loan defaults by the airline. Jet was grounded on April 17, running out of cash to operate any further.

But the CoC Monday said that a decision of further funding to Jet would be decided via the process of e-voting by respective banks that are part of the committee.

The Economic Times reported

FE: Reliance Communications committee of creditors to meet today

27 August 2019: The committee of creditors (CoC) of Reliance Communications (RCom) will hold their sixth meeting on August 27, according to a BSE notice. Ericsson had dragged RCom to insolvency and bankruptcy proceedings in September 2017 over non-payment of dues of over Rs 1,500 crore. The petition was admitted in the National Company Law Tribunal (NCLT), however, the National Company Law Appellate Tribunal (NCLAT) stayed the insolvency order, after an appeal from RCom and a settlement with Ericsson was chalked out.

On May 16, 2018, the NCLT’s Mumbai bench had admitted Ericsson’s insolvency plea against RCom and two of its arms seeking to recover unpaid dues. However, on May 30, NCLAT granted a conditional stay on insolvency proceedings against these firms.

Later in a hearing in April 2019, NCLAT said that Ericsson may have to refund Rs 578 crore that the Swedish telecom equipment maker has recovered as dues from RCom in case insolvency proceedings are triggered against the debt-ridden firm. FE had reported that hearing the RCom-Ericsson matter, the bench headed by its chairman Justice SJ Mukhopadhaya had said: “Why should one party take the amount and other creditors suffer and why should banks suffer? Why should the Indian economy suffer?”

The NCLAT had said that it would decide on the merits of RCom’s plea to allow an insolvency case against the company. The Supreme Court had, on February 20, held RCom chairman Anil Ambani and two others guilty of contempt for violating its order by not paying dues of Rs 550 crore to Ericsson. The apex court had said they would face a three-year jail term if the company failed to pay up within four weeks.

In May 2019, NCLT, Mumbai, said that any resolutions passed by Reliance Infratel’s CoC are subject to its decision on Doha Bank’s petition against admission of bankers’ claims based on invoked corporate guarantees issued by RITL in favour of Reliance Communications.

NCLT’s Mumbai bench in June 2019 approved appointment of a common resolution professional as part of the corporate insolvency resolution proceedings against Reliance Communications, Reliance Infratel and Reliance Telecom. According to the proceedings, the majority of the committee of creditors across the three companies had independently voted to appoint Anish Niranjan Nanavati as RP to replace the existing interim resolution professionals.

The selection for a common RP was also supported by the rationale that the three companies have integrated business affairs with significant overlap of lenders among the three.

The Financial Express reported

FE: Jaypee Infratech homebuyers to move Supreme Court against NCLAT order

27 August 2019: Homebuyers of embattled Jaypee Infratech (JIL) on Monday moved the Supreme Court, challenging the July order of the NCLAT that allowed fresh bidding for the debt-laden real estate firm and also barred promoters from participating in the fresh auction.

A bench led by Justice AM Khanwilkar tagged the matter along with similar other appeals pending before it. The batch of cases is likely to come up for hearing on August 29.

Jaiprakash Associates (JAL), the parent company of JIL, and Manoj Gaur, the CMD of the suspended management of JIL, had also challenged the NCLAT’s order that allowed fresh bidding for the embattled firm and also barred promoters from participating in the fresh auction.

Earlier on August 2, the SC had in effect restrained the CoC of JIL from inviting fresh bids for two weeks and had asked parties to maintain status quo after the government counsel apprised the Bench that the proposed amendments to the Code were being notified soon.

Wish Town Home Buyers Welfare Society, which claims to have over 1,100 homebuyers of various JIL projects, in its appeal, stated that the appellate tribunal without even considering all the proposals and comparing the best proposal in the interest of homebuyers had “erroneously” extended the Corporate Insolvency Resolution Period (CIRP) of JIL for another 90 days so as to invite fresh bids for the debt-laden firm. This order, according to the association, amounted to “usurping the powers of the NCLT, CoC and RP, especially when the statutory period for completion of CIRP as stipulated under IBC had expired” in May.

It suggested that the apex court should “do complete justice” by inviting the bids in the court itself so as to get rid of the complex and cumbersome process of rounds and rounds of litigations and proceedings before CoC, NCLT, and NCLAT.

The homebuyers body said that JAL had submitted its proposal to CoC under Section 12A of the IBC for consideration and withdrawal of CIRP. It said that though the proposal given by JAL was completely in favour of all the financial creditors which included homebuyers, it was not considered. JAL had stated that JIL had more assets then liabilities and the interest of homebuyers would be fully protected and the parent company would complete around 19,000 flats within four years and give possession of flats to all the homebuyers, the association said in its appeal .

“The darker clouds continue to cast gloom over the homebuyers and their frustration knows no bounds as even after 7 years of delay, the apartments – which were booked by them in 2009 – are nowhere near completion,” the petition said.

The Financial Express