New Era: Insolvency Resolution Begins for Seven Indian Companies the Economic Times

2/10/2017 New era: Insolvency resolution begins for seven Indian companies The Economic Times

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By Atmadip Ray, ET Bureau | Updated: Feb 09, 2017, 04.28 PM IST Post a Comment

KOLKATA: While Innoventive Industries moved the Bombay High Court against the Panneerselvam vs Sasikala: bankruptcy law, the Insolvency & Bankruptcy Board of India has registered six other cases Who will lead Jayalalithaa's party? Track the including one involving Vijay Mallya’s UB Engineering to begin insolvency resolution process turmoil in Tamil Nadu here against these companies, ushering in a new era in India’s dealing with sick businesses.

ICICI Bank’s application for insolvency resolution against Innoventive was the first to be registered by the Board. Among other registered cases are Srei Equipment Finance’s application against Sree Metaliks, insolvency filing by Nicco Corporation and Bhupen Electronics Ltd.

The National Corporate Law Tribunal asked the lenders to submit proof of their claims against these sick units and defaulters to the interim insolvency resolution professionals. The law allows banks to liquidate assets of a company whose debts are not recast within 180 days once the insolvency resolution process begins.

“This effectively puts the company on a ventilator with a defined quantity of oxygen. Within 180 days, either the creditors resolve to put company back into life, or the company is sent to the death bed,” said Vinod Kothari, who has been named as insolvency professional for Sree Metaliks.

The process of insolvency resolution has also begun against SynergiesDooray Automotive Ltd, which used to supply automobile components to Ford, and Rave Scans Pvt Ltd.

“This is just the beginning. We have to see one or two cases reaching the liquidation stage or resolution stage. International investors are looking at the implementation of this legislation with great optimism,” Kothari said.

More banks are expected to file such cases as they are saddled with nearly Rs 7 lakh crore of nonperforming assets and will be looking to recover dues by way of NPA resolution.

Reserve Bank of India listed NPA resolution as one of the major goalposts for banks going forward. “Resolution of NPAs will help banks start lending to the same sector again, deputy governor Viral Acharya said Wednesday.

“The Bankruptcy Code is one of the biggest economic reform in recent years,” said NS Sahoo, chairperson, Insolvency and Bankruptcy Board of India. “This will change the way business is done in India.”

The Code is however not a recovery device. “For recoveries, we have the SARFAESI and DRT laws. For lenders, the Code will come when all recovery efforts fail. The Code is a collective remedy – all creditors will have to join in action,” explained Kothari.

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New Era: Insolvency Resolution Begins for Seven Indian Companies ­ the Economic Times

New Era: Insolvency Resolution Begins for Seven Indian Companies the Economic Times