Insolvency process: Now, NCLT admits petitions against Monnet, Alok Ind
AHMEDABAD/MUMBAI: Bankruptcy proceedings against Monnet Ispat Energy Ltd and Alok Industries Ltd were approved by different benches of the National Company Law Tribunal on Tuesday.
They become the second and third among the big 12 firms identified for early bankruptcy proceedings by the Reserve Bank of India where the process has gone into the second stage. Jyoti Structures was the first.
Separately, the Ahmedabad bench of NCLT gave Essar Steel time till July 22 to file its objections to the insolvency proceedings initiated against it by its creditors, including State Bank of India (SBI) and Standard Chartered Bank.
These 12 companies were chosen by RBI for immediate bankruptcy proceedings based on one criterion: the total banking exposure of the company should be at least ₹5,000 crore and 60% of this exposure should have turned non-performing by March 2016.
In Alok Industries’s case, the firm had already admitted its default, but the tribunal had to hear a petition filed by the Industrial and Commerce Bank of China (ICBC) that sought dismissal or deferment of SBI’s petition against the firm. The Chinese bank has lent close to $55 million to Alok Industries and said there was an ongoing litigation before the Bombay high court seeking liquidation of Alok.
The judge dismissed ICBC’s petition invoking Section 14 (1) (a) of the insolvency and bankruptcy code (IBC) which gives the NCLT power to impose a moratorium on any other pending suit against the defaulter in any other court. Alok Industries owes close to ₹8,000 crore to SBI, of which ₹3,700 crore has turned non-performing. The company’s outstanding debt stands at about ₹20,000 crore.
Separately, a Mumbai bench of NCLT admitted bankruptcy proceedings against Monnet Ispat after the lead bank clarified the default amount.
Monnet was one of the first insolvency petitions filed along with Essar Steel on June 27. However, the case was stuck after the Judge queried why the claim amount in the petition was more than the default amount.
On Tuesday, the lead counsel for SBI clarified that the company defaulted on loans worth ₹1,539 crore owed to SBI compared to the claim amount of more than ₹2,239 crore. The remaining ₹700 crore is due for repayment later. According to NCLT filings, the company has total debt of more than ₹10,000 crore.
The tribunal approved consulting firm Grant Thornton India to be the insolvency resolution professional for Monnet, as suggested by SBI. It also gave permission to the promoters of the steel company to submit a resolution proposal to the IRP. In earlier hearings, Monnet’s counsel had reiterated that the company has received interest from several investors including JSW Steel.
In Essar Steel’s case, the firm had asked for more time to file its reply to the NCLT, a day after the Gujarat High Court dismissed its petition challenging RBI’s directive. In a statement on Monday, Essar had said it would raise the same issues before the NCLT, namely, it was unfairly clubbed with 11 other defaulters and it was already discussing a resolution plan with the SBI-led group.
In the case of Electrosteel Steels Ltd, appearing before the Kolkata bench of NCLT, Sachchida Nand Pandey, the firm’s lawyer, said he had no instruction from the company “to oppose the application” for appointment of an interim resolution professional. A key company official had earlier said the firm had decided not to oppose the application of State Bank of India, the lead lender. The bench has kept its order reserved.