FE: DHFL claims cross Rs 1 lakh crore

24 March 2020: The amount claimed by creditors of troubled Dewan Housing Finance Corporation (DHFL) has crossed Rs 1 lakh crore, sources told FE. The sources added that 70,913 creditors “have claimed Rs 1,00,064 crore from DHFL till now.” Financial creditors, including bondholders, have claimed Rs 86,469 crore from DHFL.

India’s largest lender State Bank of India, including SBI Singapore, is the lead creditor with a claim of Rs 10,083 crore, followed by Bank of India, which has claimed Rs 4,126 crore. Canara Bank has claimed Rs 2,682 crore, National Housing Bank (NHB) has claimed Rs 2,434 crore, Union Bank of India `2,378 crore and Syndicate Bank Rs 2,229 crore, among other lenders.

The total amount also includes claims of Rs 2,500 crore from promoter entity of Wadhawan Global Capital (WGC). The claim relates to the exercising of a put option by Wadhawan Global Capital (WGC) and was filed by Dheeraj Wadhawan on behalf of the group company.

The troubled lender is undergoing a resolution process under the Insolvency and Bankruptcy Code, 2016, after the Mumbai bench of the National Company Law Tribunal (NCLT) admitted the case on December 2, 2019. DHFL is evaluating expression of interests received for the company. FE reported earlier that lenders discussed the revised evaluation matrix of bidders in the CoC meeting held on March 12. During the meeting, it was decided that 5% more weightage will be given to net present value (NPV) compared with the previous plan. The new evaluation criteria gives 40% weightage to NPV, 30% weightage to cash upfront, 10% for capital infusion, 5% to equity stake and remaining 15% evaluation will be done based on qualitative parameters.

FE has learned that 24 applicants have submitted expressions of interest (EoIs) for DHFL. The company had given the option to bidders to bid for the whole company or in parts. Under Option I, suitors were invited to submit EoIs for the entire business of DHFL. Under Option II, prospective resolution applicants were invited to submit EoIs for one or more groups or a combination of any assets in isolation across different groups of DHFL. The bids for the bankrupt mortgage lender are to be invited across three areas – retail, non-retail and slum rehabilitation authority (SRA) loans.

Source: Financial Express reported

FE: Jet Airways: Synergy meets government officials to discuss airline’s revival

19 September 2019: The Synergy Group, the sole suitor for Jet Airways, met with government officials on Wednesday to discuss the revival of the grounded airline. The group, promoted by Bolivian-born German Efromovich, sought assurance from the government on recovery of Jet’s slots. The government sought clarity whether the group’s business proposal was compliant with Indian foreign direct investment (FDI) rules, sources said.

“Officials from the ministry of civil aviation (MoCA ) met with the group’s representatives on Wednesday. The Synergy Group mainly sought assurance on the return of Jet’s slots. In response, the government gave an assurance that reallocating the slots should not be an issue post March,” a person aware of the developments told FE.

The Synergy Group will also send a technical team to evaluate Jet’s assets, sources indicated to FE. The slots of Jet Airways, which has been grounded for the past five months, have been reallocated to other airlines till March 2020.

The government, however, has serious concerns on whether the investment from the Synergy Group will comply with Indian FDI rules, as the group is yet to find an Indian partner. As per the Indian FDI regulations, a foreign airline can directly invest up to 49% in a scheduled Indian carrier. However, the rule applies only to those entities which directly own an airline. If the foreign entity is an investment arm, private equity, fund, bank, or an industry conglomerate, FDI can go up to 74%, which is the maximum permissible investment that can be held by a foreign investor provided it is explicitly not an airline. “The Synergy Group has informed the government that it is looking for Indian partners and their legal team is looking for ways to resolve the concerns regarding FDI,” the source said.

Last week, FE reported that the resolution professional (RP) for Jet Airways has approached at least two Indian companies to partner with the Synergy Group to invest in the grounded airline. Independently, Synergy Group has also held talks with some Indian entities.

The Synergy group has also met lenders of Jet Airways including State Bank of India, IDBI Bank and Yes Bank this week. The group gave presentations to the lenders on their potential business plans with the airline. An adviser to the group had last month told FE that the group wants lenders to take a significant haircut. The Synergy Group also plans to run the airline at a much smaller scale than Jet’s earlier operations.

The financial creditors alone have admitted claims worth over Rs 8,200 crore with Jet Airways, data on the airline’s website shows. So far, creditors have submitted total claims against Jet Airways worth over Rs 30,000 crore, of which claims of over Rs 12,000 crore have been admitted by the RP. Jet Airways was grounded on April 17 this year and insolvency proceedings against the airline were initiated on June 20.

German Efromovich had in 2004 bought a bankrupt Avianca. The airline has since grown to become Latin America’s second largest. Earlier this year, Efromovich was reportedly removed from the board of Avianca Holdings for a loan breach.

The Financial Express reported

FE: McLeod Russel urges NCLT to quash ‘status quo’ order

19 September 2019: Debt-laden McLeod Russel on Wednesday urged the Kolkata-bench of the National Company Law Tribunal (NCLT) not to continue the interim order of “status quo” against its assets as it has very “serious repercussion” and negative “ramifications” for the operations of the bulk tea producer.

On September 3, the NCLT Kolkata bench passed an interim order of status quo of assets of the Kolkata-based company – once the biggest bulk tea producer in the world – as disclosed in the financial statement for the year ending March 31, 2019, till the next date of hearing.

The order was passed after one of the company’s financial creditors, Techno Electric & Engineering, apprehended disposal of the assets of the corporate debtor (McLeod) for defeating its interest.

Earlier, Techno Electric filed a petition for Corporate Insolvency Resolution Process (CIRP) before the tribunal under Section 7 of the IBC against the tea maker after it had defaulted on repayments of Rs 100-crore loan. “The documents referred to us add strength to the apprehension on the side of the applicant that if an ad interim order is not passed, there is every chance of removal of the assets of the CD (corporate debtor) for defeating the very purpose of (CIRP) resolution if any passed in favour of the applicant,” a two-member bench of Justices Jinan KR and Harish Chander Suri observed while passing the interim order.

On Wednesday, in his submission before the bench, Joy Saha, the counsel for McLeod Russel, said: “My entire line of credit will dry up because of this order. I am not able to pay the wages to around 65,000 workers of our tea gardens. It will have a catastrophic effect on the operations of the respondent company and likely to cause unrest amongst the workers. So far, as the interim order of injunction is concerned, this has very serious repercussion.”

According to Saha, each of the assets over which Techno Electric has asked for injunction are already mortgaged in favour of the banks. Stating that banks were considering a restructuring of loans proposal, Saha said, “All the banks, in common words, have been chastising me because I have not been defended the claim of an unsecured creditor.”

According to the latest annual report of McLeod Russel, part of the Williamson Magor Group, its financial creditors are ICICI Bank, HDFC Bank, State Bank of India, Yes Bank, RBL Bank, Axis Bank, Allahabad Bank, Uco Bank and United Bank of India.

The counsel for the tea company contended that the operational creditor now has taken the driver seat, while the banks, which are the the secured creditors and want to enter into loan restructuring agreement, are now “languishing in the background”.

“If an asset be mortgaged, can it be sold?” asked Saha, adding that as the assets were already mortgaged, the operational creditor would not need further protection from the tribunal. Saha urged the bench not to continue the interim order of ‘status quo’ against the company’s assets.

In his counter-argument, seeking continuation of status quo against McLeod’s assets, Techno Electric & Engineering’s counsel Ratnanko Banerjee said: “In one year, the corporate debtor sold Rs 500 crore worth of assets, even assets were mortgaged. For the purpose of the insolvency resolution process, their assets have to be preserved. I have expressed apprehensions that they will sell their assets, that is why the injunction is required.”

Banerjee allegedly said the Williamson Magor Group had siphoned off money from one group company to other group company. “This is a case for a forensic audit when the time comes,” he added.

Hearing the argument and counter argument, Justice Jinan KR said the bench was “only concerned” about whether the interim order required a ‘modification’ or not. “We are not going to confirm the order, we are not going to set aside the order,” he averred.

The Financial Express reported

BQ: NCLT Asks SBI Not To Sell Videocon’s Overseas Oil, Gas Assets

9 September 2019: The National Company Law Tribunal has asked the State Bank of India to not go ahead with its plans to sell the overseas oil and gas assets of Videocon Industries Ltd. in its bid to recover some of their dues from the bankrupt group.

Ordering a status quo, the NCLT said if SBI is allowed to execute the sale as advertised, the Videocon Group may suffer an irreparable losses if the tribunal in future takes a view that the assets in question belong to or owned by the group.

These subsidiaries are special purpose vehicles specifically incorporated by Venugopal Dhoot for holding foreign oil and gas assets for and on behalf of the group, the tribunal said in its order dated Sept. 7.

Therefore, it said, the creditors of these SPVs have lodged their claims with the RP. However, on merits the matter is still subjudice, the tribunal added.

“SBI is hereby prohibited to go ahead with the advertisement and is directed to maintain the status quo till the decision is pronounced on merits,” the NCLT said.

The order came after SBI has advertised to sell the upstream oil and gas assets of Videocon in Brazil and Indonesia inviting expression of interests.

Videocon Industries had earlier requested NCLT to include Videocon Energy Brazil and Videocon Indonesia Nunukan Inc. in the ongoing corporate insolvency resolution process, after its lenders invited bids for these assets to recover part of their debt.

Videocon Group, along with its 15 operating companies, owes over Rs 90,000 crore to lenders and was among the 40 large defaulters identified by the Reserve Bank of India in 2016.

The BloombergQuint 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

ET: Videocon requests NCLT to include overseas oil assets in insolvency process

22 August 2019: Videocon Industries has approached the bankruptcy court to include its overseas oilfield assets Videocon Energy Brazil Ltd and Videocon Indonesia Nunukan Inc in the ongoing corporate insolvency resolution process.

Videocon Group’s consumer electronics business was admitted for insolvency during April, but the oil assets were left out by lenders in the bankruptcy filing.

The company on Tuesday requested the National Company Law Tribunal (NCLT) to include details of its oversees oil and gas assets in the information memorandum that would be circulated to potential bidders and to restrain lenders from selling these assets.

“The entire funding for these oil assets was done by Videocon Industries and these are controlled by the company,” said Sandeep Ladda, a lawyer representing Videocon and its founder Venugopal Dhoot.

The move comes after the consortium of lenders to Videocon, led by State Bank of India, invited bids for the group’s oversees oil and gas assets through newspaper advertisements. Expression of interest had to be submitted latest by Thursday, August 22, as per the invitation.

Lawyers representing Videocon argued that the beneficial ownership of the Brazilian and Indonesian assets vests with Videocon Industries and that the resolution professional of the company be directed to treat all assets and properties of the subsidiary as assets of the parent company.

SBI, however, argued that assets of the two overseas subsidiaries do not fall under the IBC within Indian jurisdiction and any move to bring these assets under IBC would run into cross-border law applicability issues.

Bharat Petroleum Corporation Limited (BPCL), which has an equal stake in the oversees companies along with Videocon, is against including these assets in the insolvency resolution process or the moratorium.

“The relief will directly impact Bharat Petroleum and the impact will be for an amount of Rs 14,000 crore,” said a lawyer representing BPCL. “This amount is likely to be annulled if the reliefs are granted.”

NCLT would hear the matter on Thursday.

SBI had last month filed multiple pleas in various courts against Videocon Industries and 14 other companies controlled by founder Venugopal Dhoot to recover Rs 20,000 crore after they defaulted on payments to a consortium of banks.

The court appointed Mahender Khandelwal as the resolution professional and gave a go-ahead for consolidating the insolvency proceedings of 13 Videocon group firms into a single process.

The Economic Times reported

FE/IE: Dutch court threatens to sell Jet Airways’ confiscated assets

22 August 2019: The administrator of a Netherlands court, which is pursuing insolvency of grounded Jet Airways, on Wednesday threatened to sell off the confiscated assets of the debt-laden carrier because of non-cooperation by the committee of creditors (CoC).

A three-member bench of the National Company Law Appellate Tribunal (NCLAT) headed by Justice SJ Mukhopadhaya has sought the lenders’ response on whether they are ready to pay fees and bear costs incurred by the Dutch court administrator, Rocco Mulder.

The NCLAT said it would consider similar treatment for creditors of foreign countries as financial creditors and could allow cost of insolvency resolution process at overseas location to be borne in India. The tribunal will further hear the case on September 4.

Representing Mulder, advocate Sumant Batra told the National Company Law Appellate Tribunal (NCLAT) that the lenders are yet to decide on their claims.

“I will have to withdraw the undertaking for not disposing of the seized assets since there is no response from the CoC on my demands,” Batra said.

The administrator undertook before the NCLAT on July 11 not to sell Jet’s assets till the pendency of the case. He had challenged the NCLT, Mumbai, decision to not consider the insolvency proceedings currently underway in the European nation.

Staying the NCLT order, the appellate tribunal had said it will clarify law on the course of action when two insolvency proceedings are moved against the same company in different countries.

Jet, which terminated all operations on April 17, is facing insolvency proceedings in the Netherlands as well, where it was declared bankrupt after failing to pay two European creditors with dues of around Rs 280 crore.

The Dutch court had seized one of Jet’s Boeing 777 aircraft that was parked in the Schiphol airport in Amsterdam where Jet had a regional office.

The NCLT Mumbai on June 20 admitted the insolvency petition filed by SBI against Jet which owes unpaid liabilities of around Rs 25,000 crore in the form of bank loans, unpaid salaries, vender dues and lease rentals. It appointed Grant Thornton’s Ashish Chhawchharia the interim RP with instructions to complete the resolution process in 90 days as the matter is of national importance.

Since then, Jet’s equity partner Etihad Airways and Anil Agarwal, executive chairman, Vedanta Resources, have backed out of the resolution process. —FE

The Indian Express/ The Financial Express reported

DNA: Lenders fail to attach Sterling Biotech’s overseas assets

22 August 2019: Banks have failed to take adequate safeguards to protect the loans extended to Sterling Biotech by attaching the oil assets of the promoters in Nigeria.

Instead of carrying out a prior examination on how this could be done by discussing with the Nigerian oil regulator, senior bank officials made a visit to the country years after issuing two standby letters of credit (SBLC) worth $230 million (Rs 1,500 crore) to the promoters Nitin Jayantilal Sandesara and Chetan Kumar Jayantilal Sandesara, who are now absconding, to raise money overseas.

Despite the officials travelling to Nigeria from September 17 to 23, 2017 to attach the oil assets of the Sandesaras, no action could be enforced. Initially, the agreement was that the overseas oil company, Sterling Oil Exploration & Energy Production Company Ltd (SEEPCO), would take responsibility for the unpaid loans of Sterling Biotech’s Indian companies, but the promoters failed to repay the loans and were classified as wilful defaulters.

The Sandesaras are defaulters of Rs 15,600 crore taken on behalf of their two Indian companies, Sterling Biotech and Sterling SEZ & Infra. While Sterling Biotech owes Rs 7,500 crore, its sister concern Sterling SEZ & Infra owes Rs 8,100 crore. Despite these loans being unpaid to the consortium of lenders led by the State Bank of India (SBI), two guarantees were offered to the group’s foreign outfit, SEEPCO, so that it could borrow from overseas.

“The banker group that went to Nigeria reported back that recovery of loans from the oil field assets could be done only if the Nigerian oil regulator agreed to substitute SEEPCO with new owners,” said one of the bankers. However, the banks failed to reassign SEEPCO’s participating interest right to any other investor. No effort was made to find another investor or use the good offices of the government of India for taking charge of interests in the oil fields. No visit to Nigeria was made before sanctioning the two SBLCs, the source said.

The first SBLC worth $130 million was issued on March 2014 while the second one of $100 million was approved in September 2015. SBI had fronted the guarantees on behalf of the other banks despite two of its loans to Sterling turning into non-performing asset (NPA) and the promoters being classified as wilful defaulters.

A detailed questionnaire sent to SBI and Reserve Bank of India (RBI) failed to elicit any response.

Andhra Bank, which is now leading the lender consortium, had initially referred Sterling Biotech to the National Company Law Tribunal (NCLT) on June 11, 2018. But later lenders of Sterling Biotech voted with a 90.32% majority to pull the case out of the NCLT. In March this year, the creditors told the court that they would withdraw the case and have a one-time settlement (OTS) with the promoters. However, they refused to give the details of the OTS to the resolution professional (RP) saying that they would inform the court at the appropriate time.

A source told DNA that the absconding promoters made an offer of Rs 5,500 crore, which is 40% of the total claims of Rs 15,000 crore of the banks.

Andhra Bank has petitioned through its lawyers AZB Partners and Nishit Dhruva from MDP and Partners to withdraw the case from the NCLT so that banks could settle part of the debt with a representative, Farad Darruwala, of the promoters. However, the NCLT court noted that in the OTS there is no mention whether Daruwala is authorised by the promoters, the Sandesaras.

The DNA reported

ET: Vedanta’s Anil Agarwal withdraws ‘exploratory’ expression of interest for Jet Airways

12 August 2019: Billionaire Anil Agarwal’s family trust, Volcan Investments, has withdrawn its expression of interest (EoI) for Jet Airways a day after the billionaire expressed his interest in the grounded airline.

“The EoI for Jet by Volcan was exploratory in nature. On further evaluation and considering other priorities, we intend to not pursue this further,” Agarwal said on Monday.

Volcan was one of three players to have shown interest in the debt-ridden airline that is staring at claims worth Rs 25,000 crore. The other two players to have shown interest were Panama-based investment firm Avantulo Group and Russian Fund Treasury RA Creator. The airline did not evince the interest of any strategic player including Etihad Airways that holds 24% in the company.

In an interaction with ET, Agarwal said that while he has stepped back, he wants to encourage other airlines and investors to come forward to bid for Jet. He said his initial interest was driven a lot by his fondness for the airline.

“Jet Airways was the pioneer to open skies in India after Air India, created a world-class airline with the finest team and connected numerous global and domestic destinations. India is among the largest and fastest-growing aviation markets in the world,” he said.

Agarwal said Volcan Investments remains invested in Vedanta, Sterlite Telecommunications and Sterlite Transmission, and will keep looking for investment opportunities. Vedanta will remain in the core, natural resources business.

Agarwal through Volcan has shown a penchant to take risks and the most recent investment was Volcan’s exit from Anglo American in which it had bought a 19% stake in 2017. A year later the family trust had sold part of this stake to Vedanta’s oil and gas arm Cairn India Holdings in a move that was widely criticised by investors of Vedanta. Last month, both Volcan and Cairn exited. “We had bought a stake in Anglo at $11 per share and we exited at $22,” Agarwal said.

The trust had invested close to 15% of the stake buy as part of a consortium which earned close to $4 billion of net gain through its exit.

“I came as an investor at the right time and exited at the right time and in the process, the company has done very well,” said Agarwal adding that during his sojourn as an investor in Anglo American, the mining company was rerated, dropped plans to exit South Africa and became more disciplined. Agarwal maintained that he continues to enjoy good relations with Anglo’s management.

Meanwhile, the two players remaining in the fray have time till September 12 to submit final bids. Naresh Goyal founded Jet Airways has been grounded for close to four months due to the inability to arrange for cash to remain afloat.

The Economic Times reported