State-backed National Asset Reconstruction Company (NARCL) on Friday signed documents for acquisition of two insolvent Srei companies under the corporate insolvency resolution process (CIRP).
In August this year, the bad bank had emerged as the winning bidder to acquire Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL) under the IBC process. “As a part of the resolution process NARCL has paid ~ 50% of the committed resolution amount to the lending consortium,” it said in a release.
On Tuesday, businessline reported that NARCL and the consolidated committee of creditors (CoC) for the two Srei companies are likely to sign final documents this week before the bad bank finally takes over the two NBFCs.
Speaking on the resolution process, N. Sundar, MD & CEO, NARCL, said, “NARCL is extremely delighted to emerge as the successful resolution applicant (RA) under the IBC process for the two SREI companies. This would be one of largest time-bound resolutions in recent years. We are aiming to revive SREI’s equipment lending business and work with all stakeholders to derive optimum value for both the entities.”
Sundar said the bad bank’s endeavour would also be to maximize recovery for the lenders in a transparent and time-bound manner. A robust business continuity plan will be put in place to ensure a seamless integration process, minimizing disruptions, and maximizing efficiency, he added.
The resolution plan has received approval from the National Company Law Tribunal (NCLT), the Reserve Bank of India, and the Competition Commission of India (CCI).
Notably, the Kolkata bench of the National Company Law Tribunal (NCLT) in August this year approved the resolution plan of NARCL for the two Srei companies after the consolidated CoC in February had approved the resolution plan of the bad bank with the highest voting among bidders.
Three bidders — NARCL, the consortium of Varde Partners and Arena Investors, and Authum Investment – had participated in the challenge mechanism process, adopted by the CoC, to acquire the two NBFCs under the CIRP. After the challenge mechanism process ended, NARCL’s offer of ₹5,555 crore in net present value (NPV) terms, which includes an upfront cash of ₹3,180 crore, was found to be the highest.
The bad bank’s gross offer stands at over ₹14,000 crore, including cash and a committed amount of more than Rs 6,500 crore. Putting together all the components, financial creditors would be able to recover over 40% of the amount admitted as claims.
The total admitted claims of financial creditors are ₹32,750.22 crore. State Bank of India, Punjab National Bank, Axis Bank, HDFC Bank, Union Bank of India, Canara Bank, IDBI Bank, UCO Bank and Indian Overseas Bank, among others, are the financial creditors to the two firms.
The insolvency proceedings against SIFL and SEFL commenced in October 2021 after the insolvency petitions filed by the Reserve Bank of India were approved by the Kolkata bench of the NCLT.