Companies

Asian Colour Coated lenders to recover 22% of ₹7,123-crore debt

Suresh P Iyengar Mumbai | Updated on October 27, 2020 Published on October 27, 2020

Value maximisation should be within a time limit, rules NCLT

The secured financial creditors of Asian Colour Coated Ispat will receive ₹1,500 crore as against the admitted claim of ₹4,864 crore, leading to haircut of 69 per cent.

Unsecured financial creditors have to forego 99 per cent of their claim of ₹1,703 crore, and will get only ₹25 crore according to JSW Steel’s resolution plan for Asian Colour Coated.

Operational creditors (the government) will get just 4 per cent or ₹10 crore as against the admitted claim of ₹220 crore, while non-government operational creditors will receive their entire claim of ₹10 lakh.

Other operational creditors will need to write off 95 per cent of their claim of ₹336 crore and make good with just ₹15 crore, according to the NCLT order issued on Tuesday.

In fact, of the overall admitted operational creditors’ claim of ₹556 crore, they will recover just ₹25 crore or 4.5 per cent, after waiting for almost two years since the company was admitted for insolvency proceedings.

In all, the creditors of Asian Colour Coated will recover ₹1,550 crore or 22 per cent of the admitted claim of ₹7,123 crore.

On October 19, the NCLT had approved JSW Steel’s resolution plan with modifications. On Tuesday, it released the final written order clearing the uncertainty on the modification made and paving the way for the execution of the resolution plan. All the creditors will be paid within 30 days by JSW Steel.

Value maximisation

As for the ₹2,000-crore resolution plan submitted by US-based fund Interups Inc, the NCLT in its order said the sole objective of the tribunal is to provide a timely solution to the problem. Maximisation of value is one of the objectives of the IBC, but that does not mean the resolution process can be extended indefinitely.

“Time is the essence of the Code.. when a procedure and time limit is set, it is to be understood that maximisation of value of a company is to be seen within the time and procedure set out; not by transgressing the jurisdiction conferred upon this Bench in dealing with issues falling under the Code,” the Bench added.

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Published on October 27, 2020
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