Era Infra Insolvency Case Stuck In Limbo

A special bench of the National Company Law Tribunal (NCLT), New Delhi has sought clarity on the insolvency proceedings against Era Infra Engineering Ltd from the president of the tribunal.

In an order dated Monday, the special bench stated that the president of the NCLT, Justice Mahesh Mittal Kumar, would decide whether the case needs to be referred to a larger bench for a decision on its insolvency proceedings. The reference to the larger bench would have to be made with a question on whether insolvency proceedings can be triggered against a company when winding-up petitions are pending against it, the bench said.

Additionally, the special bench has asked questions such as:

• If insolvency proceedings are not independent of winding-up petitions, then should the proceeding be transferred to the High Court?
• Should the tribunal dispose off the matter and wait for the outcome of the winding-up petitions?

On August 8, the special bench had reserved its order in the Era Infra insolvency case as a number of winding-up petitions were pending against the company at the Delhi High Court. The tribunal bench was concerned with jurisdictional issues in the matter.

Era Infra was not the only case to face the issue of pending winding-up petitions. In the case of textile maker Alok Industries Ltd, the Ahmedabad bench of the NCLT was faced with a similar problem. HSBC Ltd had filed a winding-up petition against the company in the Bombay High Court, which was still pending admission.

In its order announced on July 18, the Ahmedabad bench admitted the case under the Insolvency and Bankruptcy Code, appointing Ajay Joshi as the interim resolution professional (IRP).

Era Infra: An Outlier

The Reserve Bank of India (RBI), in June, had identified 12 large corporate accounts for immediate action under the Bankruptcy Code. The list was then sent to concerned banks with a direction that they must approach the NCLT within a month and get these cases admitted.

More than two months after the regulator’s move, 11 cases have now been admitted under the insolvency process and IRPs have been appointed in them. Era Infra is the exception.

In most other cases, the insolvency process has begun.

In Alok Industries, for example, a consortium of lenders met with the interim resolution professional (IRP) and are discussing working capital financing options, said a senior public sector banker, speaking on conditions of anonymity.