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IFCI, a government company, is enthused over the Insolvency and Bankruptcy Code (IBC) process, stating that its experience so far has been "encouraging". This company is now making "judicious use" of the IBC to address corporate restructuring issues, which includes recovery, V Satya Ventakata Rao, Executive Director, IFCI told BusinessLine here.
As on date, IFCI has about total 57 cases at the National Company Law Tribunal (NCLT), involving Rs 5,854 crore. Rao highlighted that most of the NCLT-referred cases are already fully provided for in IFCI's books and any resolution under the IBC process could lead to profits in its profit and loss account.
"Our experience of IBC has been encouraging. It's moving in the right direction. In fact, the stigma of the board getting superseded under the IBC process is acting as a big deterrent and forcing several errant borrowers to approach us for settlement if they come to know that we are using the IBC route," Rao said.
Rao made it clear that IFCI does not see IBC as a "recovery tool". At the same time, he also felt it was "early days" to conclude that IFCI has "gained" from the IBC process. He also felt it would not be right to conclude that IBC was leading to lenders taking huge "haircuts". "The entire thing depends on the quality of underlying assets. Haircuts are going to be minimal if a good quality asset has been built on the ground by the company concerned," he said.
In the first list of 12 cases referred to NCLT, as directed by RBI, IFCI had an overall exposure (outstanding amount) of Rs 2,795.68 crore. Besides this, there are 14 cases referred to NCLT where corporate insolvency resolution process (CIRP) have been initiated by IFCI involving outstanding principal amount of Rs 760.05 crore.
There are also 31 cases where CIRP initiated by borrowers/ other creditors involving outstanding principal amount of Rs 2,298.63 crore. IFCI is faced with a huge NPA challenge and has been traditionally using routes such as SARFAESI law for recoveries. Rao said IFCI has not stopped using SARFAESI just because the IBC process has come into being.
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