NEW DELHI: Taking strong exception to slow action under the Insolvency & Bankruptcy Code (IBC), govt has started monitoring the top 20 cases, while also asking bank chiefs to closely follow the top 20 cases with their banks. This has led to movement in Jaiprakash Associates and Amtek Auto, where lenders were seen to be dragging their feet.
“Banks have been citing delays in the tribunal, but we discovered that they were themselves to blame. They were found to be discussing loan settlements in some cases when the issue had been taken up under IBC,” a top official said, suggesting a nexus between promoters and bankers in some cases.
Take for instance, Jaiprakash Associates, promoted by the Gaurs. In 2017, it was in the second batch of high-profile cases identified by the finance ministry and govt that was to be taken up for insolvency resolution. While Jaypee Infra was pursued, banks led by ICICI Bank, were seen to be moving slowly in the Allahabad bench of NCLT, despite SBI filing another petition. It was only after the govt decided to step in that the bankers pursued it.
Officials said Nirmala Sitharaman is herself reviewing some of the cases. Financial services secretary Vivek Joshi, IBBI chairman Ravi Mittal and corporate affairs secretary Manoj Govil have been monitoring the cases and asking banks to move swiftly as delay results in significant value erosion and lower the overall resolution and recovery.
Bankers have often blamed NCLT and legal system, along with promoters, for delays. But a case wise analysis by the officials showed that in several cases banks had sought adjournments and sought to put the blame on promoters. Final resolution has been done in 947 of the 7,567 cases admitted in NCLT although the finance ministry is taking credit for several cases, where the companies decided to clear the dues the moment one of the aggrieved creditors moved the tribunal (see graphic).
Recently, Amtek Auto promoter Arvind Dham was also arrested by the Enforcement Directorate in a loan fraud case following a Supreme Court order.
In the budget, Sitharaman announced measures to strengthen IBC and also provide a fresh boost to debt recovery tribunals (DRTs). Officials said govt intends to add more DRTs and Debt Recovery Appellate Tribunals, given the large and growing number of pending cases.
