Debt resolution process: Rising litigation mars success of IBC
Six months after the Reserve Bank of India (RBI) deadline for the second list of non-performing assets (NPAs), 17 of the 28 cases have been admitted to the National Company Law Tribunal (NCLT). While resolution process in at least one of the cases has been put in abeyance by a high court, two are close to resolution and as many are facing liquidation. Of the cases that have not been admitted, Soma Enterprise was restructured outside of NCLT before the deadline, said a lender. In the case of Anrak Aluminum, the high court stayed insolvency proceedings and lenders approved a one-time settlement. For Shakti Bhog Foods, winding-up was already ordered by the high court.
Bhushan Power: Tatas move SC against revised bids
Tata Steel has moved the Supreme Court against the National Company Law Appellate Tribunal decision to consider revised bids for stressed asset Bhushan Power and Steel (BPSL). Tata Steel was earlier verbally declared the highest bidder. Moving the petition in the Apex Court on Friday, Tata Steel asked for an urgent hearing as the lenders will consider the revised bids by August 6. However, the three-judge bench headed by Chief Justice Dipak Misra turned down the urgent hearing plea and posted the hearing for August 10. Earlier, Tata Steel had written a letter to Bhushan Steel’s Committee of Creditors not to consider the 19,000-crore revised bid placed by JSW Steel.
Abraaj fund investors hire advisers to help recover debt
Investors in a $1.6 billion Abraaj Group fund have hired advisory firm Alvarez and Marsal Holdings, LLC to help recover money owed by the floundering Middle-Eastern private equity firm, people with knowledge of the matter said. The New York-based company will represent Abraaj Private Equity Fund IV’s backers in talks with liquidators as they seek to recover more than $99 million owed by the Dubai-based buyout firm, said the people, requesting anonymity. The stakeholders have formed an investor committee led by Boston-based HarbourVest Partners, two of the people said.Alvarez will also represent the fund if it’s elected to a liquidators’ committee for Abraaj Investment Management Ltd, which is the buyout firm’s asset management business, two of the people said.
States want single audit of MSMEs
States governments have pitched for a single audit system for Micro, Small and Medium Enterprises (MSMEs) and for a one-time settlement scheme for legacy issues related to the pre-GST regime. Small and medium enterprises are currently required to get their accounts audited separately for Income Tax and GST. Presumptive taxation scheme, under Section 44AD of the Income Tax Act, is available for small and medium enterprises with a 2-crore turnover limit. SMEs with a higher turnover will have to maintain detailed account books and ensure proper auditing. Similarly, under Section 80 (3) of CGST Rules, every registered person whose aggregate turnover during a financial year exceeds 2 crore should get his accounts audited as specified under sub-section (5) of section 35.
Can’t allow late NCLT bids; this vitiates the bidding process, tribunals must rule against it
While it is a fact that the Insolvency and Bankruptcy Code (IBC) is still in its early days and, in a sense, is still evolving, it is time some ground rules are laid out. One of these has to be the disqualification of late bids for stressed companies because it takes away from the sanctity of the deadline for submitting bids. It is indeed a pity that Tata Steel needed to knock on the doors of the Supreme Court to protest against the tribunals entertaining late bids. What’s worse, the SC on Friday refused the company an early hearing. This is an undue punishment for a company that has diligently stuck to the deadline and gives competitors an unfair advantage because the contents of the early bids invariably find their way into the public domain.
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