MUMBAI: The overloaded National Company Law Tribunal is set to receive a huge chunk of resolution plans in early January as banks scramble to come up with a plan for loans worth Rs 3 lakh crore under the June 7 circular.Lenders need to come up with a plan by January 7, failing which they would be required to make 20% provisions or refer the cases to court under IBC within 30 days, under the new RBI rule.“Many cases will be referred to NCLT whereever banks fail to put together a resolution plan,” said a senior bank executive with a public sector bank. “If banks do not refer cases to NCLT, they will have to make additional provision of 20%.”Lenders are referring cases to IBC based on the viability and depending on the extent of haircut the bank can take.The volume of such stressed cases, particularly with respect to exposures of more than Rs 2,000 crore, was estimated by us at Rs 3.8 lakh crore of exposure across 72 large borrowers as of September 2018, Icra said in a report.Under the revised June 7 framework, the lenders are bound to enter into an inter-creditor agreement (ICA), to implement a resolution plan. The ICA is binding on all creditors party to the ICA if it is approved by 75% of the creditors in terms of outstanding value and 60% of the number of creditors.72286166 If the resolution plan is not implemented in a time-bound manner, the provisioning on such accounts can increase up to 50% in a period of 4-5 quarters from the account turning special mention account.By January 7, creditors have to enter into an inter-creditor agreement and the resolution plan and will have to implement it within 180 days of the end of the review period.Since December 2016, 2,542 cases have been taken under IBC and of these 186 have been closed on appeal or review or settled, 116 have been withdrawn, 587 have ended in orders for liquidation and 156 have ended in approval of resolution plans, according to the report by Insolvency and Bankruptcy Board of India.
from Economic Times https://ift.tt/35IfX47
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