Four days after India’s biggest lender rushed to sell its outstanding advances to Essar Steel, New Delhi appears to be stepping in to help expedite the resolution of top 12 default cases that make up about a fourth of the country’s bad-loan pile.
The government has called a meeting on Monday with the resolution professionals and lenders of the dozen cases, three people familiar with the matter told ET. Timelines have already run beyond what is permitted by law in many cases. Three lenders from each of the dozen cases are expected to attend the meeting.
Injeti Srinivas, Secretary, Ministry of Corporate Affairs, and M S Sahoo, chairman of Insolvency and Bankruptcy Board of India (IBBI), will take stock of the situation on the technical impediments causing the delays. An email sent to MCA secretary remained unanswered until the publication of this report.
The government wants to review the progress of the 12 large accounts referred under the Insolvency and Bankruptcy Code (IBC), said IBBI in a communiqué. The meeting will deliberate on the possible solutions to bring these cases to a conclusion.
“The main purpose is to find out the factors leading to delays as the government is concerned over the abnormal delays in those large cases,” said a senior executive with direct knowledge of the matter.
Essar Steel, one of the largest bankruptcy cases, failed to repay about Rs 49,000 crore to its lenders. The case has been running for one and half years. The IBC permits a maximum of 270 days for settling a case.
Executives involved in these 12 large cases are expected to share their experience meticulously. They are required to present six key points to the government officials: Brief profile of the case, present status, reasons for delay in resolution or liquidation, action taken, difficulties faced in resolution or liquidation that caused delays, and efforts made by RP or liquidator to complete the process.
“IBC cases need to maintain the sanctity of timing as the entire process is a time-bound system,” said Manoj Kumar, Partner & Head – M&A, Transactions and Insolvency, Corporate Professionals Capital. “The government looks committed to upholding IBC as a key tool to control bad loans.”