Srei group’s bondholders have moved the National Company Law Appellate Tribunal (NCLAT) challenging an order by the Kolkata bench of the National Company Law Tribunal (NCLT) allowing Srei to skip repayments between 1 January and 30 June. Debenture trustees Axis Trustee Services Ltd and Catalyst Trusteeship Ltd which represent bondholders have jointly moved the tribunal against the NCLT order, which has impacted retail and institutional investors alike.
Retail investors were particularly hit by the halt to repayments, which the company said was meant to deal with the asset-liability mismatches that occurred as a consequence of the covid-19 pandemic. So far, the Kolkata-based non-bank financier missed repayments on eight instances between 11 January and 15 February, showed data. The appeal will be heard on 3 March, according to information available on the NCLAT website.
“This is to inform you that in order to protect the rights and interests of the debenture holders, Catalyst Trusteeship Ltd have preferred a collective appeal before the NCLAT inter-alia challenging the impugned order dated 30 December 2020 passed by NCLT, Kolkata, in the petition…by SREI Equipment Finance Ltd (SEFL),” Catalyst Trusteeship said in a statement.
Apart from bank loans, the company is estimated to have outstanding market-linked debt instruments worth ₹499 crore, including the money put in by retail investors.
According to a report by Moneylife on 16 January, Axis Trustee Services wrote to bondholders seeking their views on challenging the NCLT order before the appellate authority.
Under the scheme of arrangement, Srei proposed to make repayments to several categories of debenture holders over an extended period. Retail investors will get their interest accrued during the moratorium period within 15 days after it ends. This arrangement, Srei said on 31 December, is a “natural consequence” of the first scheme that SEFL proposed to banks and financial institutions and is pending before the NCLT.
The new plan will encompass all its secured and unsecured non-convertible debenture holders, foreign lenders from whom the company had raised secured and unsecured external commercial borrowings, and all the perpetual debenture holders.
Meanwhile, Srei group’s proposal to transfer the assets to SEFL is yet to be approved by all lenders. In a regulatory filing on 4 July 2019, Srei said it will consolidate the lending business into SEFL “since the focus for last four years has been on growing equipment financing and reducing the infrastructure loan portfolio”.
“The proposed step will also facilitate the lending entity, Srei Equipment, to attract strategic investors and also prepare the company for a conversion into a bank, as and when the Reserve Bank of India (RBI) decides to allow the conversion,” it said in July 2019.
