Bhushan, Essar Steel among 12 firms listed
The Reserve Bank of India (RBI) has directed lenders to immediately move the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy code 2016, to begin insolvency proceedings against 12 defaulters.
The 12 companies account for 25% of the total Non-performing assets (NPAs) of the banking system. All these accounts have bank loans that exceed Rs. 5,000 crore each and have been identified as non-performing by 60% of the lenders.
Steps taken by RBI in this regard:
- The central bank has asked lenders to file bankruptcy proceeding against the six largest borrowers within 15 days and move against the rest in 30 days
- It has also formed an Internal Advisory Committee (IAC) in this regard
- The Internal Advisory Committee (IAC) had recommended 12 NPA accounts for immediate reference under the Insolvency and Bankruptcy Code, 2016
- RBI said it will release revised provisioning norms for cases that are accepted under the IBC
How does the process work:
- After the case is admitted in the National Company Law Tribunal (NCLT), insolvency resolution professionals would take over the management of the company
- From the date of admission of the case in the NCLT, resolution professionals along with the committee of creditors would have 180 days to come up with a resolution plan. In some special cases, a 90-day extension could be given by the NCLT.
- If the committee of creditors, along with the resolution professionals fails to come out with a resolution plan then the company will go into liquidation
- India’s new insolvency code sets out a tight deadline for restructuring resolutions to be struck, failing which the defaulters would be moved into forced liquidation