IVRCL resolved under IBC, lenders set to recover dues
Premium- IVRCL, which was under liquidation, will be taken over by a consortium led by Ponguleti Prasad Reddy for ₹1,200 crore
MUMBAI : Hyderabad-based construction company IVRCL’s lenders are set to finally recover a part of their dues, almost five years after the Reserve Bank of India (RBI) prodded banks to refer the debt laden company to the insolvency tribunal. The dues will be settled in six tranches
IVRCL was among 28 large borrowers on RBI’s list of bad loan accounts that was sent to lenders in August 2017, as part of an initiative to clean up the banks’ balance sheets.
In an order on 15 June NCLT said IVRCL, which was under liquidation, will be taken over by a consortium led by Ponguleti Prasad Reddy for ₹1,200 crore. The company had debts of over ₹14,492 crore. “The IVRCL case is first of its kind where the tribunal has permitted the consideration to be paid in instalments. This is an example of a pragmatic approach both by the tribunal as well as stakeholders so that the objective of the code is achieved," Ashish Pyasi, associate partner, Dhir and Dhir Associates, said.
In February 2018, IVRCL was admitted under the Insolvency and Bankruptcy Code (IBC) and Sutanu Sinha was appointed as the resolution professional. After the company failed to receive an acceptable resolution plan by end of 2018, Sinha moved the insolvency tribunal seeking liquidation of IVRCL. On 26 July 2019, the tribunal ordered liquidation of the company and appointed Sinha as the liquidator. The consortium led by Reddy was the sole bidder and the proposal to acquire IVRCL as a going concern was approved by lenders in December last year. Reddy initially offered to pay ₹1,200 crore over two years, but later agreed to settle the dues in 18 months. Regulations say a bidder needs to pay the entire amount within 90 days of a demand notice issued by a liquidator.
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Others pointed out that if prospective bidders are permitted to purchase the company during liquidation by staggered payments, it may lead to a situation where the commercial wisdom of the lenders under IBC may shift to the judicial wisdom of NCLT. “It also promotes a scenario for the acquirer to bypass the process of negotiation with member of committee of creditors during the period of corporate insolvency resolution and wait to purchase as a going concern for a much lower consideration during liquidation," said Sandeep Bajaj, managing partner, PSL Advocates and Solicitors.