ICICI moves NCLT against Punj Lloyd; SBI opposes

I CI CI Bank has filed a case against Punj Lloyd, an international engineering procurement and construction company, in the NCLT, New Delhi, for insolvency and bankruptcy proceedings. SBI, the lead lender, however, disapproved of the move on grounds that the RB I’ s February 12 circular gave corporate debt ors six month store solve their debt.

While ICICI Bank has filed a case against Punj Lloyd, the engineering procurement and construction company, in the National Company Law Tribunal (NCLT), New Delhi, for insolvency and bankruptcy proceedings, the petition seeking initiation of insolvency proceeding against the corporate debtor was opposed by State Bank of India (SBI).

The division bench headed by Justice M M Kumar issued a notice to Punj Lloyd, saying the lender has moved the tribunal under the Insolvency and Bankruptcy Code (IBC). ICICI Bank has filed the case against Punj Lloyd to recover dues of ~8.52 billion.

SBI disapproved the move on the grounds that the Reserve Bank of India’s (RBI) February 12 circular gave corporate debtors six months time to clear their debt and Punj Lloyd still had time to seek for an out-of-court settlement.

Legal representative of SBI told the NCLT that the company's asset base only covered 5 per cent of its debt and there are 20 on-going projects, which are the only source of revenue for the company.

Further, the counsel for SBI said if insolvency proceedings against the company were initiated the projects would be halted. SBI is the lead lender for Punj Lloyd.

In a statement to the stock exchange Punj Lloyd said, “In a lenders’ meet on June 13, over 90 per cent of the lenders had agreed to support a resolution plan under the leadership of SBI for restructuring the debt.” It added that lenders had decided that SBI, on behalf of all lenders, would oppose ICICI’s plea at the NCLT.

Punj Lloyd said the NCLT had directed the company and SBI to file the necessary replies in this regard and fixed a hearing for July 24.

“We are of the view that the application filed by ICICI Bank may not be admitted by the NCLT since more than 90 per cent of the lenders are in favour of debt restructuring,” the statement said.

Punj Lloyd is part of the RBI’s second list of non-performing assets that were notified for proceedings under the IBC and has a debt of ~60 billion. The firm specialises in providing services for energy, infrastructure and defence and has operations across West Asia, Africa, the Asia Pacific, South Asia and Europe

Punj Lloyd’s stock price fell 11 per cent from its closing price on the previous day to ~14.85, at the end of trade on the BSE.