Lenders to Sintex Industries have, in principle, agreed to sell their debt to the government-promoted asset reconstruction company due to inordinate delay by the bankruptcy court in approving the resolution plan, two people aware of the development told ET.
Nearly 97% of lenders voted for ₹3,651-crore plan given by Reliance Industries in partnership with Assets Care & Reconstruction Enterprise (ACRE) in March this year. The resolution professional had filed the winning bidder’s plan with Ahmedabad National Company Law Tribunal (NCLT) for approval on March 23.
At a meeting mid-November, lenders discussed the possibility of selling Sintex Industries to National Asset Reconstruction Company (NARCL).
“Since there is no certainty on the time that tribunal may take to approve the plan, the lead bank has proposed to sell the loan to NARCL,” the people said.
The Ahmedabad NCLT is scheduled to hear the matter on a resolution plan on December 7, according to the tribunal’s website. Several issues are being heard at the tribunal, potentially delaying the resolution. Axis Bank has filed a petition with the tribunal opposing the distribution of the proceeds from the winning resolution applicant. Axis Bank was the only bank that voted against the resolution plan.
Separately, litigation on transferring the title deed of a 202-acre land purchased by the company is yet to be resolved. Also, there are matters relating to preferential transactions, a rejected claim of ₹531 crore from sister concern Sintex Prefab, which is amidst corporate insolvency and refund of power and GST subsidy.
The NCLT approval would be delayed until these issues are resolved; the people cited above said. Lenders expected NARCL would give an offer within a fortnight and conclude the sale of debt in the fourth quarter. The offer from NARCL will be a combination of cash and security receipts which would be redeemed on recovery of loans. The shortfall in the recovery promised by NARCL is guaranteed by the government.
The RIL-ACRE team offered ₹3,651 crore as part of a plan that includes payments to verified lenders, trade creditors and employees. The duo’s offer includes 15% equity to verified lenders, which made the offer attractive. ACRE, an asset reconstruction company, is backed by Ares SSG Capital, an alternative investment fund.
NARCL recently acquired ₹9,234 crore Jaypee Infratech loans from lenders for ₹3,570 crore. Lenders of Jaypee Infratech approved the plan in July 2021, but it is pending approval from NCLT.
