Govt sets March deadline to resolve 9 top insolvency cases

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New Delhi, Jan 29: The government has set a March deadline for lenders and resolution professionals (RPs) to resolve nine of the dozen high-value insolvency cases, with Essar Steel and Jaypee Infratech identified for special focus. The overall message is to speed up resolution of cases to signal that the Insolvency & Bankruptcy Code (IBC) is providing the desired results in unlocking bank money that was blocked. The dozen high-profile cases owed around Rs 2.5 lakh crore to lenders. These cases are yet to be sorted out even after 18 months, way above the 270-day deadline in the law.
Given the massive public interest in Jaypee Infratech, which is yet to deliver over 20,000 apartments, villas and plots to home buyers, the government has advised the RP to initiate steps, including seeking legal remedy to speed up a decision.
Sources said lenders pointed to the legal hurdle that required two-thirds of the banks as well as home buyers backing a resolution plan, which was proving to be difficult as those who did not vote were counted as ‘negative votes’. “There was a suggestion that legal view should be sought on calculating the 66% vote based on those present and voting, instead of the entire electorate,” said a government source. The National Company Law Tribunal’s (NCLT’s) principal bench is yet to decide on a plea moved by lenders on the issue. Besides, those who are yet to submit their claims may be classified as ‘benami holders’ or non-available, which will make decision-making simpler, officials suggested at a meeting last week. Bankers, however, said a resolution in Jaypee over the next 60 days may be difficult as the entire process resumed in August.
Lenders led by SBI also pointed out that a decision in the Essar Steel case has been pending with NCLT’s Ahmedabad bench for months, something that subsequently sorted out, with the National Company Law Appellate Tribunal (NCLAT) asking for the hearing to be completed by January 31.
“Almost all the cases are in absolutely final stages of resolution. So, it can be done,” a government official said.
The cases have been moving from one legal forum to another as bidders as well as some of the promoters are involved in a bitter battle to acquire the companies that are operational and come at attractive valuations. The four resolutions that have been finalised so far have seen financial creditors get anywhere between 26% and 64% of their claims.