It’s not just banks which are using the Insolvency and Bankruptcy Code, 2016 (IBC) against loan defaulters to recover bad loans. Bhushan Power & Steel Ltd has dragged Amtek Auto Ltd — both of which figure in the list of 12 large defaulters identified by the RBI for early bankruptcy proceedings to court under the new law to recover dues.
According to the filings before the Chandigarh bench of National Company Law Tribunal (NCLT) Bhushan Power & Steel, an operational creditor of Amtek Auto filed a petition under IBC in early May, seeking to recover over Rs 60 lakh from the Delhi-based auto ancillary firm. The case was admitted by the NCLT and an interim resolution professional was appointed.
On May 18, Justice RP Nagrath of the Chandigarh NCLT, dismissed the petition after Amtek Auto deposited a cheque of over Rs 60 lakh with Bhushan Power. The court also granted Bhushan Power the liberty “to seek appropriate remedy, if need be, including filing of fresh petition” under Insolvency and Bankruptcy Code in the case.
Emails and phone calls to Bhushan Power and Amtek Auto did not elicit any response.
Bhushan Power & Steel and Amtek Auto owe lenders Rs 37,248 crore and Rs 14,074 crore, respectively. Banks led by Punjab National Bank have initiated proceedings against Bhushan Power & Steel under the IBC. The firm is privately held with promoters owning 94.4 per cent shares and rest owned by foreign institutional investors. The company has plants located in five locations in northern and eastern India. Bhushan Power reported a net loss of Rs 2,433 crore in FY16 on revenues of Rs 8,491 crore. Its gross debt stood at Rs 37,248 crore in FY 16, up from Rs 33,785 crore in the previous fiscal.
The lenders of Amtek Auto include Dena Bank, Corporation Bank, Bank of Maharashtra, among others. According to sources, the firm owes over Rs 800 crore to Corporation Bank — the lead bank of the consortium of lenders that has petitioned for insolvency against the firm at the NCLT. For the year ended March 31, 2017, Amtek Auto had reported a net loss of Rs 2,533.46 crore. The proceedings against Bhushan Power and Amtek Auto follows a directive by the RBI on June 13 to banks asking them to refer 12 troubled firms with a combined debt of close to Rs 2.5 lakh crore to the NCLT. The 12 accounts identified by the RBI are those in which banks have an exposure of more than Rs 5,000 crore, more than 60 per cent of which has been recognised as NPAs.