State-owned banks have decided to withdraw bankruptcy proceedings against Sterling SEZ and Infrastructure Ltd., as they wait for the National Company Law Tribunal (NCLT) to judge a one-time offer made by Sterling Biotech, the bankrupt group flagship.
The Mumbai bench of the NCLT will hear the lenders’ petition Wednesday on the offer made by Sterling SEZ and Infrastructure. Sterling SEZ was referred to the NCLT in July 2018 for debt resolution under the Insolvency and Bankruptcy Code 2016.
In February this year, the NCLT asked the Enforcement Directorate (ED) to hand over the assets of Sterling SEZ to the resolution professional so that the value of the assets should not erode and its assets are sold to repay banks. This was done when the ED seized the physical assets of Sterling SEZ after the company defaulted on bank loans and its promoters fled the country.
The ED had earlier informed the NCLT that the Sterling Biotech group consist of Sterling International Enterprise Limited, PMT Machines Limited, Sterling SEZ and Infrastructure Limited, Sterling Oil Resources Limited, Sterling Port Limited etc are under investigations by multiple agencies.
It said the Sterling Biotech group obtained credit facilities of more than Rs 5,000 crores from banks and these loan turned into non-performing assets. The banks conducted forensic audit to ascertain the end use of loans availed by SBL Group and the Enforcement Directorate received forensic audit report from Andhra Bank and State Bank of India which showed the use of loan funds for non-mandated purposes, payments made to non-existant parties and non justificatory payments to directors, etc.
As on date, credit facilities availed by the SBL group to the extent of Rs 8100 Crores and was declared as fraud account by the concerned banks. It also said the CBI registered an FIR on October 25, 2017 against various the promoters of SBL group, on the basis of which the Enforcement Directorate also investigated into the offenses under the Prevention of Money Laundering Act.
As the investigation kept unfolding the role of different accused persons and determination of various assets which are proceeds of crime/laundered money led to attachment of properties involved in money laundering which were nothing but proceeds of crime to the tune of Rs 4,274 crores and filing of different prosecution complaints, the last being filed on 23 October last year before special PMLA Court, Patiala House, New Delhi.
The PMLA Court has issued non-bailable warrants against the accused persons/promoters of SBL group on October 25 2018. It said the promoters of the company have fled the country. A PTI report had earlier said that the promoters have asked the court to quash these warrants.
In the case of Sterling Biotech, the NCLT Mumbai had earlier asked for responses from almost all regulators including the Reserve Bank of India, the Central Bureau of Investigation, the Enforcement Directorate and the market regulator, the Securities and Exchange Board of India after lenders agreed to an one-time settlement offer made by Sterling’s promoters. Sterling Biotech made an one-time settlement offer of Rs 3110 crore which was 65 per cent haircut to the banks. The financial creditors had made claims worth Rs 15,000 crore against Sterling Biotech, as per the resolution professional's statement to the stock exchanges.
But the lenders attempt to withdraw the insolvency proceedings against Sterling Biotech did not materialize in the last hearing on March 27th and the National Company Law Tribunal has listed the matter for hearing on April 26.