Introduction

There is a word out in the legal arena about a review committee to be formed for the review of legal provisions that allow for the withdrawal of an insolvency case in approbation of an often-negligible one-time settlement (OTS).

The Siva Industries Case

What shall one anticipate when a bank loan of roughly to the tune of INR 5000 Crores (4863 Crores to be exact) is settled for a meager INR 323 Crores. Interestingly, the CoC member and biggest bank of the country SBI dissented against the settlement proposal.

Moreover, the case becomes even more important when the lenders are withdrawing the bankruptcy process of Siva Industries and Holdings. Furthermore, what may be important here to note is that; the settlement amount accepted by banks is said to be even lower than the liquidation value of Siva Industries and Holdings, and; it will result in a loss of approx. Rs. 4,700 Crores of public money. Interestingly, IDBI Bank as the lead banker is settling the case with the same promoter who was earlier charged by CBI for defrauding the same lender to the tune of Rs 600 Crores along with the other than posted senior officials of the bank. This is a matter of concern as this particular case might set an appalling precedent and defeat the purpose of the Insolvency and Bankruptcy Code, 2016.

 What happened?

Lenders of Siva Industries and Holdings Limited, founded by Mr. C. Sivasankaran, who is the former promoter of Aircel have filed applications under Section 12A of Insolvency and Bankruptcy Code, 2016 (IBC) in the Chennai Bench of National Company Law Tribunal (NCLT) for withdrawing the insolvency proceedings against company. In the month of April, the creditors led by the IDBI Bank discussed and; approved a one-time proposal of Siva Industries, where creditors agreed to cut their claims by a major 93.4%, bringing 4863 Crores to a meager INR 323 Crores. Lenders have also agreed to withdraw all pending legal proceedings against Sivasankaran’s Companies as part of the resolution plan.

On June 15, NCLT questioned the extensive haircut (95.85%) that; lenders have agreed to take in the insolvency resolution of Videocon group firms. According to data from the Insolvency and Bankruptcy Board of India (IBBI), in over 363 major NCLT resolutions since 2017, banks have taken an average haircut of 80%.

The Flaw in the law

The State Bank of India which is a member of the CoC has opposed the settlement plan and has marked its strict reservations against the said one-time proposal in the NCLT.

The State Bank of India, in a detailed response to Zee Business, had clarified:

“SBI is not a lender to Siva Industries, hence these queries may be addressed to the Lead Lender or COC for the company. Incidentally, SBI was a lender to one of the group companies that was guaranteed by Siva Industries. As part of the CIRP process of Siva Industries; SBI’s claim on invocation of this corporate guarantee was included in the claims admitted; which amounts to 5.77% of the total claims. SBI has voted against the proposed compromise offer and has already filed its motion before NCLT to protect its interests.”

Section 12A was added by an amendment of IBC in 2018, which allows the parties to close an insolvency case with the approval of 90% of the committee of creditors (CoC). However, it now appears that this exit process is being wrongly used in multiple cases.

 

Read more blogs @advocatetanwar.com

 

Written by

Abhishek Khare Advocate 

One Reply to “4863 Crores is equal to 323 Crores?”

  1. Указанные цены действительны при покупке шин на условиях самовывоза со склада в период с 9 https://servishin.ru/catalog/gruzovye-shiny/kama/1260.html
    30 до 17 https://servishin.ru/catalog/gruzovye-shiny/yokohama/
    30 в будние дни https://servishin.ru/catalog/gruzovye-shiny/aeolus/hn355.html
    Действующие цены при покупке шин на складе в вечернее или ночное время, а также в выходные и праздничные дни, уточняйте по тел https://servishin.ru/catalog/gruzovye-shiny/hankook/hankook-dh31-31570r225-154150l.html
    : +7 (495) 721-65-00 https://servishin.ru/catalog/gruzovye-shiny/bridgestone/
    Чтобы ознакомиться с подробными характеристиками автошины кликните мышкой по типоразмеру https://servishin.ru/catalog/gruzovye-shiny/firestone/
    ВСЕ ЦЕНЫ УКАЗАНЫ С НДС!!!
    В нашем интернет-магазине Вам точно так же помогут опытные консультанты, как и в реальном, а шина может быть доставлена при помощи , или же Вы сами можете приехать и забрать ее из удобного для Вас места https://servishin.ru/catalog/gruzovye-shiny/aeolus/aeolus-neoallroadst2-38565r225-164k.html

Leave a Reply

Your email address will not be published. Required fields are marked *

This field is required.

This field is required.

Disclaimer

The following disclaimer governs the use of this website (“Website”) and the services provided by the Law offices of Kr. Vivek Tanwar Advocate & Associates in accordance with the laws of India. By accessing or using this Website, you acknowledge and agree to the terms and conditions stated in this disclaimer.

The information provided on this Website is for general informational purposes only and should not be considered as legal advice or relied upon as such. The content of this Website is not intended to create, and receipt of it does not constitute, an attorney-client relationship between you and the Law Firm. Any reliance on the information provided on this Website is done at your own risk.

The Law Firm makes no representations or warranties of any kind, express or implied, regarding the accuracy, completeness, reliability, or suitability of the information contained on this Website.

The Law Firm disclaims all liability for any errors or omissions in the content of this Website or for any actions taken in reliance on the information provided herein. The information contained in this website, should not be construed as an act of solicitation of work or advertisement in any manner.