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State-run lender Canara Bank has dragged telecom solutions provider GTL and its subsidiary GTL Infrastructure to the National Company Law Tribunal (NCLT) claiming a default of about ₹1,000 crore.
However, GTL group has disputed the outstanding amount, pegging it around ₹700 crore. GTL group immediately moved the Supreme Court and got a stay, with the apex asking the parties to maintain “status quo’.
Canara Bank has filed an application for initiation of Corporate Insolvency Resolution Process (bankruptcy proceedings) claiming ₹542 crore from GTL Infrastructure and ₹459 crore from GTL. GTL Infra informed the BSE that the outstanding is about ₹276 crore.
GTL separately said it has reached a settlement with lender for more than 40 per cent of the outstanding amount.
GTL denies default
“The company denies the existence of the default, in fact as per Canara Bank’s own admission in its balance confirmation dated April 9, 2018, the debt of the company stands reduced to ₹275.48 crore as on March 31, 2018. The alleged default by Canara Bank is entirely on illegal and unjustifiable grounds, especially since the company has been regular in payments of its interest and principal instalments since implementation of the Strategic Debt Restructuring (SDR) scheme,” GTL Infrastructure said in the regulatory filing.
“The company has initiated appropriate legal proceedings before the relevant judicial authorities to contest the contention of occurrence of a default, which proceedings are currently sub-judice,” it said, adding the company has “obtained a status quo” against the proceedings from appropriate judicial forum.
Canara Bank is acting contrary to the actions of other secured lenders, neither of whom have raised the similar actions.
Importantly, 77 per cent of them have recently completed assignment of their debt in favour of Edelweiss Asset Reconstruction Company (EARC Trust), it said.
“This illegal action is resulting in delays to the urgently required restructuring of the current debt of the company.”
In case of GTL, the company said it has already reached a settlement with lender for more than 40 per cent of the value. “Some lenders have been misusing provisions of NCLT to go against vote of majority and threaten well-managed businesses,” an industry source said.
“This action by Canara Bank is in fact in direct contravention of the RBI’s guidelines which prescribe that if more than 75 per cent of the lenders of a consortium have accepted an offer from an ARC, the remainder are obligated to sell as well hereof, nearly 80 per cent of the rupee lenders have assigned their debt in favour of EARC,” he added.
Letter to employees
In separate letters to employees, the company accused that the allegations of default are entirely on “frivolous and unjustifiable grounds”.
“It (Canara Bank) is acting as an outlier bank as none of the other 18 banks from the consortium have sought to raise similar defaults. More importantly, the company has been up to date with its payments of interest and principal to Canara Bank up to the date of filing of the above application,” the letter, a copy of which was seen by BusinessLine , said.
The company moved the Supreme Court, which issued a “status quo” order. This implies that the continuation of the NCLT proceedings will be stayed until resolution of the above issues.
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