Scared of the provisions under the newly-enacted Insolvency and Bankruptcy Code (IBC), around 2,100 firms cleared off dues worth Rs 83,000 crore so that they do not lose control.
Stating data compiled by the ministry of corporate affairs (MCA), a times of India report said that over 2,100 companies have cleared their outstanding amounts, a majority of which came after the government amended the IBC to explicitly bar promoters of companies that were classified as a non-performing assets (NPAs) from bidding for these companies where the National Company Law Tribunal, the bankruptcy court, initiated action.
A loan would become an NPA if the time span for not clearing the dues would exceed 90 days.
Meanwhile, enthused by successful conclusion of the Bhushan Steel Ltd. case, the finance ministry expects banks to get back more than Rs 1 lakh crore after the resolution of all 12 non-performing assets referred to insolvency proceedings by the Reserve Bank of India in its first list.
Last week, Tata Steel Ltd. acquired a controlling stake of 72.65 percent in the debt-ridden Bhushan Steel for around Rs 36,000 crore.
The remaining 11 NPA cases which are in the pipeline will easily bring to the table over Rs 1 lakh crore and the amount coming from resolution under the Insolvency and Bankruptcy Code will directly add to the bottom line and help in reducing bad loans of public sector banks, a senior finance ninistry official told PTI.
Last year in June, RBI's internal advisory committee identified 12 accounts, each having more than Rs 5,000 crore of outstanding loans and accounting for 25 percent of total non-performing assets of banks.
Following the RBI's advisory, banks referred Bhushan Steel Ltd, Bhushan Power & Steel Ltd, Essar Steel Ltd, Jaypee Infratech Ltd, Lanco Infratech Ltd, Monnet Ispat & Energy Ltd, Jyoti Structures Ltd, Electrosteel Steels Ltd, Amtek Auto Ltd, Era Infra Engineering Ltd, Alok Industries Ltd and ABG Shipyard Ltd to NCLT. These accounts together have total outstanding loan of Rs 1.75 lakh crore.
The Kolkata Bench of the National Company Law Tribunal has already approved Vedanta Resources's resolution plan for acquisition of Electrosteel Steels last month.
