Bhushan, Essar Steel among 12 firms listed

RBI had identified a dozen accounts for insolvency process

The Reserve Bank of India (RBI) has directed lenders to immediately move the National Company Law Tribunal (NCLT) to begin insolvency proceedings against 12 defaulters including Essar Steel, Bhushan Steel and Alok Industries, bankers said.

According to the bankers, who did not wish to be identified, the RBI has communicated the names of the 12 defaulters to the leaders of the respective lenders' consortiums. State Bank of India (SBI) is the leader of 6 such consortiums, while ICICI Bank and IDBI Bank are the other leaders.

The 12 companies account for 25% of the total non-performing assets (NPAs) of the banking system, which is about ₹7 lakh crore.

All these accounts have bank loans exceeding ₹5,000 crore each and 60% of the lenders have identified these accounts as non-performing. Some of theother borrowers are Lanco Infratech, ABG Shipyard, Electrosteel Steels, Jyoti Structures, Bhushan Power & Steel,the bankers said.

An RBI official declined to comment on the names of defaulters.

15-days time

The central bank has asked lenders to file bankruptcy proceeding against the six largest borrowers within 15 days and move against the rest in 30 days.

RBI had formed an Internal Advisory Committee (IAC), which had in its first meeting on June 12 agreed to focus on the top 500 stressed exposures in the banking system.

The IAC hadrecommended 12 NPA accounts for immediate reference under the Insolvency and Bankruptcy Code, 2016 .

The RBI has not publicised the names of the 12 borrowers.

After the case is admitted in the NCLT, insolvency resolution professionals would take over the management of the company, a senior banker said.

From the date of admission of the case in the NCLT, resolution professionals along with the committee of creditors would have 180 days to come up with a resolution plan. In some special cases, a 90-day extension could be given by the NCLT.

“If the committee of creditors, along with the resolution professionals fails to come out with a resolution plan then the company will go into liquidation,” the senior banker said on condition of anonymity.

Reuters reports:

The other companies include Monnet Ispat & Energy Ltd and Jaypee Infratech, Reuters reported citing sources with direct knowledge of the matter.

CNBC TV18 on Friday reported the 12 names that include Amtek Auto and Era Infra Engineering.

The NCLT has been appointed as the nodal court for insolvency and bankruptcy proceedings. The filings could have far reaching implications, as India’s new insolvency code sets out a tight deadline for restructuring resolutions to be struck, failing which the defaulters would be moved into forced liquidation, potentially leading to further value erosion and jeopardizing tens of thousands of jobs.