Business tycoon Sajjan Jindal, promoter of JSW Group, which is among the domestic suitors to buy stressed steel assets, has called for disallowing dubious promoters to bid to prevent misuse of the Insolvency and Bankruptcy Code (IBC).
Jindal took to micro-blogging website Twitter, tagging Finance Minister Arun Jaitley, Union Law Minister Ravi Shankar Prasad along with Finance Ministry and the Prime Minister Office’s official Twitter handle, and said,
Dubious promoters should not be allowed to submit the rehabilitation plan to prevent misuse of the IBC. Also the bidding criteria should be spelt out explicitly prior to inviting the bids. This will avoid likely litigation #NCLT @FinMinIndia @rsprasad @arunjaitley @PMOIndia— Sajjan Jindal (@sajjanjindal) November 8, 2017
Jindal’s comments come a day after bankers said that bidders for the stressed assets undergoing insolvency proceedings, cannot be wilful defaulters and be cleared of all wrongdoings.
State Bank of India Chairman Rajnish Kumar, at a banking event on Monday said, “I am not concerned about that because if even it is existing promoters there will be few preconditions from the creditors’ side. One is that they should not be wilful defaulters and second is a forensic audit which should clear them of any wrong doing and third is about the quality of resolution plan which is submitted.”
Recent reports suggested that Essar Group had submitted an expression of interest to buy Essar Steel, one among the 12 large corporate cases identified by the Reserve Bank of India to be referred to the National Company Law Tribunal (NCLT) court under the IBC.
"Ethical (or not)...I don’t know, but legally they (existing promoters) are within their rights to participate (in the bids)," Kumar said.
Jindal’s JSW Group is India’s largest steelmaker and one of India’s largest conglomerates with other businesses including mining, energy and infrastructure.
As per reports, JSW Steel is one of the six contenders to bid for the unlisted Bhushan Power and Steel, currently under the insolvency process for the past few months. The other five prospective bidders are Tata Steel, Vedanta, UAE-based investor AION Capital and Bhushan Power and Steel’s promoter Sanjay Singal.
This is the second time this month that Jindal has expressed his views on social media.
On November 2, he used the social media to voice his concerns about the continuation of trading in the shares of companies that await resolution before a raft of dedicated bankruptcy courts.
“Listed company shares in the event of reference to #NCLT should be suspended as per a global practice to avoid speculation in the market...Suspension of shares helps in cleaner takeovers and doesn't make the deal expensive for the prospective investor,” said two of his tweets.
“Investors must have the flexibility for automatic de-listing of the company as the equity value is not there in most of #NCLT cases. @FinMinIndia,” he further tweeted.
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