Bad loan resolution

This refers to the editorial ‘Back door entry’ (May 3). While measures for the resolution of bad assets under the Insolvency and Bankruptcy Code (IBC) are delivering positive results as compared to the other measures in vogue, the IBC must be used for optimising the overall benefit to the financial and operational creditors, the employees and to keep the assets working to generate revenue to the economy.

Giving an opportunity to the unscrupulous promoters of a company that defaulted on repayments to the creditors to get back possession of the company at deep discounts is against the interest of the creditors and employees and will pave the way for the growth of financial crisis and indiscipline in the economy. In order to avoid that more reforms in the resolution of bad assets under the IBC are essential.

Kottayam

This refers to ‘SBI to consider Jet staff’s billion-dollar bid after May 10’ (May 3). Minimising haircuts to the maximum must have been the prime consideration when the lenders of Jet Airways Ltd (JAL) decided on a resolution plan without preferring the IBC route. Conversion of debt into equity, becoming majority shareholders and diluting the promoters’ role in the process were all initiated by the lenders with the aim of getting better price discovery for the shares from interested investors.

Any resolution plan involving acquisition and subsequent divestment of shares by lenders, should have taken into account any interim funds needed to continue minimum operations that will keep alive the ‘going concern’ concept and keep the interests of prospective investors alive.

For inexplicable reasons, the lenders who lead from the front in the revival efforts till then, decided against any interim funding (which could have been recovered with proper escrow mechanism) resulting in the shutdown of operations. Along with cessation in operations, the airport lease slots were also allotted to other airlines. The share price has crashed since then by more than 40 per cent.

Any investment from now on might well be around the current price only. Unless the prospective investor agrees to pump in additional funds in the form of loans (unlikely in the present scenario), along with amount to be invested as equity, the hair cut for lenders on their exposures is likely to be substantial.

Coimbatore

By triggering a landmine blast targeting security forces in Gadchiroli in Maharashtra, leading to the death of 15 men in uniform, Maoist insurgents have sent a clear message that their fire-power to strike at security forces had not vanished full.

Effective implementation of the two-pronged strategy of addressing the crippling socio-economic deprivation afflicting those in the lower rungs of society such as tribals and concrete measures towards the end of strengthening coordination among security agencies would go a long way in eliminating the menace of Maoist insurgency from the country.

Sholavandan, TN

This refers to ‘Telengana Inter exams fiasco: New firm to be roped in to clear the mess’ (May 3). As Intermediate is a milestone exam for youngsters, the State’s educational department should have taken utmost care in handling the affair. Whatever be the credibility of the software team, a trial run, counter-checking and a maker and checker policy independent of one another would have gone long way in preventing such blunders and errors.

Bengaluru

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