India's Bhushan, Essar Steel among 12 firms being moved to insolvency courts -sources

Era Infra Engineering

16/06/2017 12:28

* RBI list also names Jaypee Infratech, Bhushan Power, 
Monnet 
    * Bank groups plan meetings in coming two weeks to decide 
action 
    * RBI move aimed at resolution of $31 bln of bad loans 
 
    By Devidutta Tripathy 
    MUMBAI, June 16 (Reuters) - India's central bank has asked 
lenders to initiate bankruptcy proceedings against a dozen 
companies, including Essar Steel, Bhushan Steel Ltd  BSSL.NS , 
Monnet Ispat and Energy Ltd  MNET.NS , sources with direct 
knowledge of the matter said. 
    This follows a change enacted in laws last month that gives 
the Reserve Bank of India greater power to address the $150 
billion stressed loan problem plaguing growth in Asia's 
third-largest economy. This week, the RBI said it had identified 
12 of the country's biggest loan defaulters.  urn:newsml:reuters.com:*:nL3N1JA4IS 
    Jaypee Infratech  JYPE.NS , Electrosteel Steels  ELSS.NS , 
unlisted Bhushan Power & Steel, textiles maker Alok Industries 
 ALOK.NS , ABG Shipyard  ABGS.NS  and Jyoti Structures  JYTS.NS  
are also among the firms that will be taken to insolvency courts 
by the RBI, said the sources, who asked not to be named as the 
list was not public. 
    The RBI has yet to officially name any of the 12 companies, 
which account for about 2 trillion rupees ($31 billion) of 
India's non-performing loans, or roughly 25 percent of all the 
country's bad loans. 
    CNBC TV18, which reported the 12 names earlier on Friday, 
also said Lanco Infratech  LAIN.NS , Amtek Auto  AMTK.NS  and 
Era Infra Engineering  ERCI.NS  were on the list. Reuters could 
not immediately verify these three names. 
    According to the television station, RBI has asked banks to 
initiate bankruptcy proceedings against six of the firms within 
15 days and to file petitions for the others within 30 days. 
    The RBI had no official comment. 
    A spokesman for Essar Steel declined to comment, while a 
spokesman for Electrosteel said they had heard from their main 
lender that creditors wanted to initiate resolution of the 
unpaid loans through the National Company Law Tribunal. 
    The NCLT has been appointed as the nodal court for 
insolvency and bankruptcy proceedings in India. A bankruptcy 
filing would result in recovering some funds owed through a debt 
restructuring, or ultimately through liquidation of the company. 
    Such action means banks would no longer leave bad debt on 
their books and it could force them to put more money aside to 
cover losses - at a time when funds are already short as banks 
seek to comply with international capital standards. 
    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 at the 
heavy industry companies on the list.  urn:newsml:reuters.com:*:nI8N1ID053 
    Indian banks typically lend larger sums in groups. Lead 
banks plan to call meetings of the groups over the next two 
weeks to decide the next course of action, one source said.   
    Jaypee Infratech, Lanco, Bhushan Steel, Monnet, Bhushan 
Power & Steel, Jyoti, Era, Amtek, Alok and ABG were not 
immediately reachable for comments.         
 ($1 = 64.4400 Indian rupees) 
 
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FACTBOX-India's bankruptcy code process for creditors, 
defaulters     urn:newsml:reuters.com:*:nL3N1JB369 
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 (Reporting by Devidutta Tripathy; Editing by Euan Rocha and 
Himani Sarkar) 
 ((devidutta.tripathy@thomsonreuters.com; +91 84518 40430; 
Reuters Messaging: 
devidutta.tripathy.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA BANKRUPTCY/