The resolution professional (RP) of GPI Textiles had, in fact, written to the committee of creditors of Essar Steel that ArcelorMittal should also pay the dues of GPI Textiles – a Pramod Mittal company as he is the younger brother of LN Mittal. The RP of GPI Textiles has filed a caveat in the National Company Law Tribunal (NCLT) seeking a hearing before it clears the ArcelorMittal proposal on Essar Steel.
Kumar said this anomaly is likely to be removed by way of an another amendment to Section 29A which was earlier introduced to ban erring promoters of defaulting companies from bidding for their assets.
Kumar added that recoveries in the 12 NCLT accounts referred by the RBI in its first list will be 50 per cent, while for the second list of NCLT companies, the recoveries will be lesser.
“If we can get a reasonable amount of money, given the state of affairs of the borrower and the threshold in our mind, we won’t hesitate for a one-time-settlement. But once it is in the NCLT, we cannot change our stand,” added Kumar.
“Rehabilitation and restructuring (of debt) is not possible in today’s environment. There are few options: Either you (corporates) pay back or we sell the loan to an ARC or take the corporate to the NCLT, Kumar said. The IBC and the February 12 circular of the RBI banning any restructuring of loans has helped banks recover their debt, he said.
Union Bank of India MD & CEO Rajkiran Rai said due to the IBC, recoveries of the bank has doubled in the first six months of the current financial year. “Our first half recovery is almost double the recoveries made in the entire fiscal of 2018,” Rai said. “We are doubling our recovery this year compared to last year. And maybe in the coming year, we will see recoveries higher than slippages during a quarter, which will be the best signal that the worst is behind us,” he said.
On the problem of late bidders making higher bid after the entire process is over, Romesh Sobti, CEO of Indusind Bank, said it’s time to go for an open auction of all the IBC cases. Although IBC is a very well-drafted legislature, bad losers are testing it. If one doesn’t agree with something, he can go to court and file appeals,” Sobti said.