Mumbai : Lenders of Hyderabad-based construction company IVRCL are finally set to recover a part of their dues, nearly five years after the Reserve Bank of India (RBI) prompted banks to refer the debt-laden company to the insolvency tribunal. The arrears will be settled in six phases
IVRCL was among 28 large borrowers who were referred to banks in the list of bad loan accounts of banks in August 2017.
In an order dated June 15, the NCLT said that IVRCL, which was under liquidation, would be taken over by a consortium led by Ponguleti Prasad Reddy. 1,200 crores. The company had more debt 14,492 crore. “The IVRCL case is the first of its kind where the tribunal has allowed payment in installments. This is an example of a pragmatic approach by both the Tribunal as well as the stakeholders so as to achieve the objective of the Code,” said Ashish Pyasi, Associate Partner, Dhir & Dhir Associates.
In February 2018, IVRCL was admitted under the Insolvency and Bankruptcy Code (IBC) and Sutanu Sinha was appointed as the resolution professional. After the company failed to obtain an acceptable resolution plan by the end of 2018, Sinha moved the insolvency tribunal, seeking the liquidation of IVRCL. On 26 July 2019, the tribunal ordered the winding up of the company and appointed Sinha as the liquidator. Reddy-led consortium was the sole bidder and the proposal to acquire IVRCL was approved by the lenders in December last year. Reddy initially offered to pay 1,200 crore in two years, but later agreed to settle the dues in 18 months. The regulations state that a bidder is required to pay the entire amount within 90 days of a demand notice issued by a liquidator.
Others pointed out that if potential bidders are allowed to buy the company during liquidation by staggered payments, it may create a situation where the commercial knowledge of the lenders under the IBC may transfer to the judicial knowledge of the NCLT. “This promotes a scenario for the acquirer to bypass the process of negotiation with a member of the committee of creditors during the period of corporate insolvency resolution and wait for the purchase as a concern for little consideration during the liquidation period.” does,” said Sandeep Bajaj, Managing Partner, PSL Advocates & Solicitors.