Srei resolution . No relaxation, modification of evaluation matrix, says counsel

The counsel appearing on behalf of the administrator for the insolvent Srei group of companies on Thursday argued that there was no relaxation or modification of any kind, since all the submitted resolution plans were subjected to the same evaluation matrix. He further argued that all the compliant resolution plans were shared with the Committee of Creditors (CoC) by the administrator before being put to vote and any perceived “wrong”should have been flagged then and not now, post voting.

He was countering the allegations of the counsel appearing on behalf of the debenture shareholders, who are also a part of the CoC, who had earlier said that there was “no certainty of recovery” from the underlying assets of the corporate debtor and hence the repayment to creditors could be impacted.

The counsel for debenture shareholders had also argued that, as per the final resolution plan submitted by NARCL, the security receipts to be issued to the creditors would be by way of redemption of secured non-convertible debentures and that there was no guarantee that it could be redeemed at the expected price.

“The administrator looks at all plans and sees if it is compliant and then puts it to the CoC for voting. All CoC members get the plan details, so if any CoC member found something wrong he should have raised it then but he was quiet during the entire process and now that the bid has been okayed he is raising objection now. This is basically abusing the process of law,” Sudipto Sarkar, the counsel appearing on behalf of the administrator, said before the division bench of Kolkata National Company Law Tribunal (NCLT) on Thursday.

The bench would continue hearing the matter on Monday. It will also hear the arguments by the counsels for the consolidated CoC and the successful resolution applicant, namely National Asset Reconstruction Company (NARCL).  

According to the final resolution plan submitted by NARCL, security receipts worth around ₹1,800 crore from the recovery of the underlying assets of the corporate debtor, which in this case is basically the loans given to borrowers, would be issued to creditors. This would essentially mean that the creditors would have to patiently wait for NARCL to recover the loan before they can be paid. Further, it is not known how many of the borrowers were still alive, or had not landed in corporate insolvency resolution process themselves, the counsel had argued while highlighting the uncertainty of recovery and hence repayment to creditors.

It is to be noted that Authum Investment and Infrastructure, whose financial bid was adjudged the second-highest in terms of NPV, had questioned the evaluation matrix in a petition before the Kolkata bench of NCLT.

Following the completion of the challenge mechanism process, the Srei group entities received three bids. The consolidated CoC for two insolvent Srei companies approved NARCL’s offer of ₹5,555 crore in NPV terms including upfront cash of ₹3,180 crore, with the highest voting (89.25 per cent).

The resolution plan submitted by Authum Investment and Infrastructure (₹5,526 crore in NPV terms) received 84.86 per cent vote and that of the consortium of Varde Partners and Arena Investors (₹4,680 crore in NPV terms) got 9 per cent vote.

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