SBI accepts One Time Settlement proposal submitted by PC Jeweller

SBI

In big relief to debt-ridden PC Jeweller, country's largest lender, State Bank of India (SBI) has accepted  the One Time Settlement (OTS) proposal submitted by the company, the company informed the stock exchanges on March 13.

The terms of OTS includes cash and equity component, release of securities and mortgaged properties, the company said. The development is significant as P C Jewllers has been in talks with lenders led by SBI for an out-of-court settlement for a long time.

The company owes over Rs 3400 crores to a clutch of lenders.  PC Jeweller's troubles began in February 2023, when banks decided to recall loans advanced to it after it was revealed in a filing that the company had defaulted on loans worth Rs 3,466 crore from banks and financial institutions. Loan recall is a process where the source lender requests the return of the amount advanced to the recipient or borrower.

The company, in its annual report for fiscal 2021-22, stated that it had borrowed money from 14 banks, including SBI, Indian Bank, Union Bank and Punjab National Bank. In the annual report, the company said it owed the banks Rs 3,278 crore, which included the interest and the base amount.

The largest lenders are SBI with Rs 1,060 crore outstanding, Union Bank of India with Rs 530 crore, Punjab National Bank with Rs 478 crore and Indian Bank with Rs 226 crore.

In June 2023, SBI moved an insolvency plea against PC Jeweller Limited, National Company Law Tribunal (NCLT) issued notice in the plea and sought for PC Jewller's response. In response to SBI's plea, PC Jeweller filed a 26 volume response to its 19 volume plea.

On  January 9, the NCLT was on January 9 informed that there have been certain developments in settlement talks between  SBI and PC Jeweller over repayment of the latter's loan.

Senior counsel Nagesh, who appeared for SBI further told the court that the  top management of is presently considering the settlement offer made by PC Jeweller. Lawyers for PC Jewller and SBI thus jointly sought for an adjournment of the case. The NCLT has accordingly adjourned it to January 29 for further consideration on the outcome of settlement talks.

On December 12, the parties jointly told NCLT that the settlement talks were underway  and sought for deferment of hearing. The jewellery company has offered to pay a sizeable chunk of its outstanding dues spread over a period of three years along with an upfront payment. PC Jeweller owes over Rs. 3,000 crore to SBI.

In November 2023, it was reported that SBI took control of two prime properties in New Delhi, citing default in payments.