ICICI Bank on Thursday urged the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against Punj Lloyd as the infrastructure developer had defaulted on loans worth Rs 853 crore. However, other lenders to the engineering company, led by State Bank of India (SBI), objected to the plea. Punj Lloyd owed banks Rs 5,640 crore at the end of March 2018.
Lenders argued Punj Lloyd currently owns only a few assets from which they can recover the dues. The initiation of the insolvency process, they said, could halt the completion of the company’s 20 ongoing projects, resulting in smaller recoveries for banks.
The counsel appearing on behalf of SBI also pointed out the six-month period granted to the corporate debtors for debt resolution outside Insolvency and Bankruptcy Code (IBC), as per the Reserve Bank of India’s (RBI) February 12 circular, was yet to expire.
ICICI Bank said it has extended Punj Lloyd a total of Rs 853.83 crore through working capital, term loan and other facilities since 2010. However, the company started defaulting on payments of both the principal and interest components since 2015. In 2016, ICICI classified the account as a non-performing asset (NPA).
ICICI Bank was earlier a member of the joint lenders’ forum (JLF), but has now stepped out of the JLF to move the insolvency petition against Punj Lloyd. The NCLT’s principal bench, led by president justice MM Kumar, has agreed to hear ICICI Bank’s plea on July 24 and has issued a notice to Punj Lloyd.
Punj Lloyd figured in RBI’s second list of NPAs. After incurring losses for three years in a row since 2014-15, Punj Lloyd posted a net profit of Rs 317.37 crore in 2017-18.
The company’s shares on Thursday closed at Rs 14.85 apiece, down 11.08 per cent over the previous closing on the BSE. —FE