Lenders seek EOI from ARC for Nagarjuna’s bad loans

Lenders to Nagarjuna Fertilizers & Chemicals invite expression of interest to transfer bad loans from asset reconstruction companies 1,500 crore, IDBI Bank Ltd., which is part of the consortium, said.

The lenders invited expressions of interest from asset reconstruction companies and National Asset Reconstruction Company Limited to acquire the bad assets on an all-cash basis at the reserve price. 810 crores. The last date for submission of EOI is November 17 and interested parties can make inquiries thereafter.

The company has exposure to seven banks. IDBI will transfer 568 crores, state Bank of India , 576.91 crore), UCO Bank , 31.22 crore), bank of india , 49.98 Crore), Indian Overseas Bank ( 103.63 Crore), Punjab National Bank ( 55.75 crore) and ICICI Bank 196.70 cr. IDBI said that National Asset Reconstruction Company Limited (NARCL) may also participate. “During the insolvency process the promoters of the company were not cooperating with the banks and were pursuing stays. Banks did not get any interest for the property under IBC. This is because banks have decided to transfer stressed assets to ARCs as they believe they will be able to get better recovery,” said a senior bank official.

“The company had also agreed to enter into a one-time settlement with the banks in 2020, but it failed after the Enforcement Directorate filed a case against the company,” he said.

The company was admitted into corporate insolvency resolution on 27 August 2021 by the Hyderabad Bench of the National Company Law Tribunal, following a petition filed in 2019 by Swiss operational creditor, KiTrade AG, which claimed 17 crore plus interest. NCFL moved the Appellate Tribunal for the first stay against the NCLT order. Since then the insolvency process has stalled. On 8 November, the Chennai bench of the NCLAT further extended the stay on the insolvency proceedings. “We had to take a decision because we are at an impasse,” said the banker.

“IBC as a resolution mechanism is the last resort for lenders. Lenders use resolution mechanisms like one-time settlement, sale of their stressed exposures, out-of-court restructuring under RBI circular of June 2019 and SARFAESI. The fastest resolution mechanism is OTS and sale of stressed loans. We are seeing more resolution activity outside IBC as the process is taking 2-3 years,” said Nikhil Shah, MD, Alvarez & Marshall.