Srei Group: NCLT Approves Consolidated Insolvency For Two NBFCs
Creditors to Srei Group NBFCs allowed to initiate consolidated insolvency proceeding.
The Kolkata bench of the National Company Law Tribunal has approved consolidated insolvency proceeding for Srei Group's two non-bank lenders.
Srei Infrastructure Finance Ltd. and Srei Equipment Finance Ltd. will face a consolidated insolvency proceeding under the same committee of creditors, according to two people with direct knowledge of the matter. The bidders will place a single bid under the insolvency proceeding to purchase a consolidated balance sheet, the first of the two people quoted above said.
The creditors were forced to consider a consolidated insolvency proceeding due to a business transfer agreement that the two NBFCs had approved without adequate consent from their respective lenders. Under this agreement, the lending businesses of Srei Infrastructure Finance were consolidated under Srei Equipment Finance, the first of the two people said.
While there is no provision in the Insolvency & Bankruptcy Code for a group insolvency proceeding, the NCLT can approve such proposals by the creditors, for quicker resolution.
An email sent on Monday to Rajneesh Sharma, the Reserve Bank of India appointed administrator, for the two Srei Group companies was not immediately answered.
The consolidated loan book of the two companies stood at Rs 28,455 crore as of Sept. 30, 2021, according to an internal presentation circulated among creditors. Of this, nearly 79% or Rs 22,463 crore worth of loans have been classified as non-performing, BloombergQuint had reported.
According to data available on the Srei Group website, financial creditors have claims worth Rs 10,727.49 crore against Srei Infrastructure Finance and Rs 31,867.75 crore against Srei Equipment Finance.
The major banks with loan exposures to the two companies include Union Bank of India, Canara Bank, State Bank of India, Punjab National Bank and Bank of Baroda.
The RBI, on Oct. 4, 2021, had announced that it was superseding the boards of Srei Infrastructure Finance and Srei Equipment Finance and was appointing an administrator to run affairs at the company owing to their weak financial position. The regulator also directed lenders to initiate insolvency proceedings against the two companies.