RBI to send 100 more companies to NCLT

RBI to send 100 more companies to NCLT

Mumbai, Nov 8: A large number of stressed companies are set to be referred to the National Company Law Tribunal (NCLT) with the Reserve Bank of India (RBI) making it mandatory to have 100 per cent voting for any debt restructuring proposal.
“It’s not only the power companies which are facing the brunt of RBI move, but many other companies from telecom and allied industries are also facing the bankruptcy action. In many cases, a bank with less than one per cent vote at the committee meetings had stopped the debt resolution plans and the rest of the banks have no other option but to follow suit and refer the company to the NCLT,” said a lender.
The Supreme Court will hear a case filed by the power producers’ association against the RBI’s February 12 circular from next Tuesday. Any order will impact these stressed companies from other sectors also as the Supreme Court has bunched all petitions which are filed against the RBI circular.
Lenders and CEOs said in many cases Life Insurance Corporation (LIC), Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) and public sector banks are not giving consent to any debt restructuring proposals. This will lead to at least 80 to 100 more companies being referred to the NCLT, said a lender. In turn, it would impact jobs and supply chains of large and small companies.
A CEO of a mid-sized company said that they had to move the Supreme Court after only one bank decided to vote against its debt sale plan which was cleared by rest of the lenders. “This bank, with less than five per cent vote, has made sure that we are referred to the NCLT which would impact returns for all banks,” he said.

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