The bankrupt steel firm was admitted to the National Company Law Tribunal (NCLT) on July 26, 2017, the notice sent by SBI's Stressed Assets Management Branch, New Delhi, said
State Bank of India (SBI) has invoked the personal guarantees of Sanjay Singal, promoter of Bhushan Power & Steel, after the company defaulted on loans worth Rs 48,000 crore to a consortium of banks.
The resolution plan for the debt-ridden company is almost ready, with JSW Steel declared the highest bidder for its Rs 19,700-crore offer. The matter is pending in the Supreme Court, which is expected to announce its verdict in two weeks.
In a notice to Singal, SBI
said its loans of Rs 12,276 crore had been unpaid since 2017, and as no security was provided by the guarantor (Singal), the entire amount as of August 31, 2020, was payable by him.
The bankrupt steel firm was admitted to the National Company Law Tribunal (NCLT) on July 26, 2017, the notice sent by SBI's Stressed Assets Management Branch, New Delhi, said.
The action against Singal came within days of the finance ministry asking banks to invoke personal guarantees in all the insolvency cases. This was after the Supreme Court asked the ministry on July 22 to respond to a petition alleging that banks were not taking action against defaulters despite having personal guarantees.
The finance ministry, in turn, sent a communication to the heads of all public sector banks on August 26, saying the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, which came into force on December 1, 2019, empowered lenders to file insolvency applications against personal guarantors to corporate debtors before the NCLT under the Insolvency and Bankruptcy Code, 2016.
“In this connection, banks may consider putting in place a mechanism for monitoring the cases which may require initiation of individual insolvency process before the NCLT against personal guarantors to corporate debtors. Banks may also consider setting up IT (information technology) system to collate data regarding personal guarantors to corporate debtors in all such cases for the requisite follow up and consequential action,” it said.
On June 12, SBI
had invoked the personal guarantees of Anil Ambani in the NCLT (Mumbai) after RCom was sent to the tribunal for debt resolution.
Action against other promoters is to follow, which include all the 40 large default cases, which were sent to the NCLT for debt resolution
on the Reserve Bank of India’s recommendation in 2017. After the Delhi High Court stayed the matter against Ambani, the SBI
moved the Supreme Court and the matter will be heard this week.