The National Company Law Tribunal report card is not looking good: Recovery rate for resolutions is at a three-year low and average time taken for the resolution process is rising. But with the coming of Bad Bank and persisting problem of bad loans, the need for NCLT cannot be denied
With the coming of Bad Bank and persisting problem of bad loans, the need for NCLT cannot be denied
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Just over a month after the National Company Law Tribunal (NCLT)-approved Piramal Capital and Housing Finance’s resolution plan to acquire the bankrupt and debt-ridden mortgage firm Dewan Housing Finance Corporation (DHFL), the matter is back in litigation. Technology firm 63 moons, a debenture holder of DHFL, has challenged the order saying it was ‘contrary to law’ and against the interest of DHFL’s creditors.
Over 570 days have passed since DHFL—which had nearly Rs 85,000 crore of debt owed to banks, mutual funds and other investors—had been referred by the Reserve Bank of India, for resolution under the Insolvency and Bankruptcy Code (IBC). Issues such as delayed bidding from the Adani Group last year and a fresh settlement offer from DHFL promoter Kapil Wadhawan—who is in judicial custody—had only delayed the resolution process further.
In another case involving Anil Ambani-led enterprise communications services provider Reliance Communications, a resolution is still to be arrived at since May 2018, when the case filed by telecom equipment manufacturer Ericsson India was admitted at the NCLT. There have been concerns that the regulator had raised earlier on whether an asset reconstruction company can buy RCom’s spectrum and other assets as part of the resolution.
Talks have emerged that the Department of Telecommunications may not renew RCom’s telecom license later this month, due to unpaid statutory dues. This will hurt the complete insolvency resolution process further and only mean erosion in the value of assets, forcing banks to take more haircuts.