This was after RBI
refused to a proposal from the banks
to relax the rules in this regard for those companies
which are close to a resolution.
Industries, Jaiprakash Associates and Jayaswal Neco Industries are now among those to face NCLT
proceedings for resolution of their loans. These three were recommended by banks
for resolution outside the NCLT
process but RBI, as mentioned, negatived this.
Under the Insolvency and Bankruptcy Code, a defaulting company’s board of directors are suspended and NCLT
appoints an insolvency resolution
professional to manage its day to day affairs. The company will then be sold to the highest bidder who takes over the largest portion of the debt. Banks
are also expected to write off a substantial portion, up to 70 to 80 per cent, on the dues.
In its annual report for 2017, Videocon
said it owed Rs 20,905 crore to banks.
Jaypee’s debt was Rs 25,586 crore and that of Nagpur-based Jayaswal Neko
Rs 4,188 crore.
Apart from Videocon
Industries, its telecom arm, Videocon
Telecommunications, with debt of Rs 3,000 crore, will also be sent to the NCLT. Banks
will have to make 50 per cent provisioning for these loans on their balance sheet.
group’s realty arm, Jaiprakash Infratech, is already before the NCLT; its equity has received interest from the JSW group, Adani and Vedanta during the resolution process.
dictat to send all companies
on its list to NCLT
comes as Reliance Communications announced sale of its wireless assets to Reliance Jio, effective the March 2018 quarter, for Rs 20,000 to Rs 24,000 crore. Lenders said RCom
will be considered a non-performing asset in the December quarter and they will make provision for its Rs 44,700-crore loan, by the RBI
On June 2 this year, RCom
signed a ‘standstill agreement’ with its lender, under which it would not be paying dues till December 2018. The RBI
had come out with its first circular on sending companies
on June 13.