Steely Reserve — Banks refer Bhushan, Essar and Electrosteel to NCLT

Law professionals | Corporate lawyer- Rs 6,10,000 | Senior attorney- Rs 9,50,000 | Interpreting and using the rule of the law to win arguments in favour of the client is a lucrative profession. The best lawyers earn several lakhs, even crores for a case. So much so that lawyers give up offers to become a judge so that they can maintain their incomes as lawyers! Being a lawyer requires a high level of patience, education and communication skills.

After a series of meetings on Thursday, lenders led by the State Bank of India (SBI) decided to begin insolvency proceedings against Bhushan Steel, Essar Steel and Electrosteel Steels by referring them to the National Company Law Tribunal (NCLT) for recovery under the Insolvency and Bankruptcy Code (IBC).

Bhushan Steel owes Rs 44,500 crore to banks, while Essar Steel has a debt now at Rs 37,300 crore and Electrosteel Steels at Rs 10,280 crore. These three borrowers are among the 12 accounts identified by the Reserve Bank earlier this  month for immediate reference to NCLT under the IBC.

"Most likely, we will be filing the case at the NCLT soon," a banker aware of the development said. “We know all the cases by now. The meetings are largely to finalise the application which banks will be filing to NCLT given that there is more legal backing,” said another senior banker.

Meanwhile, a consortium of bankers, led by Punjab National Bank, will meet on Friday to discuss on Bhushan Power and Steel, which has defaulted on about Rs 37,250 crore to the lenders.

Besides these three accounts, the other stressed borrowers likely include Amtek Auto, which is in default of Rs 14,074 crore, Alok Industries (Rs 22,075 crore), Monnet Ispat (Rs 12,115 crore) and Lanco Infra (Rs 44,364.6 crore). Era Infra (Rs 10,065.4 crore), Jaypee Infratech (Rs 9,635 crore), ABG Shipyard (Rs 6,953 crore) and Jyoti Structures (Rs 5,165 crore) were also among the identified stressed accounts.

The RBI has identified 12 accounts with debt above Rs 5,000 crore with at least 60 percent of it declared as NPAs  or non-performing assets as on March 2016. Cumulatively, the 12 accounts constitute a quarter of the total stressed loans in the system at over Rs 10 lakh crore.

On Saturday, Lanco Infratech informed the Reserve Bank of India (RBI) has directed its lead banker IDBI Bank to initiate insolvency procedure for the company. Once a case is referred to NCLT, there is a 180-day time line further extendable by further 90 days to decide on a resolution plan. If a plan is not decided, then the company will go into liquidation.

The internal advisory committee (IAC) formed under the RBI after its first meeting on June 13 had recommended 12 accounts totalling about 25 percent of the gross NPAs of the banking system for immediate reference under Insolvency and Bankruptcy Code.

On Thursday, RBI also announced the five members of the Oversight Committee expanding its ambit to help resolve bad loans beyond the S4A (scheme for sustainable structuring of stressed assets) mechanism.