NCLT admits EMC for Rs 6,500 cr liability

KOLKATA/MUMBAI: The National Company Law Tribunal‘s Kolkata bench has admitted the insolvency plea against power transmission company EMC Ltd, which has defaulted on payments to the tune of Rs 6,500 crore to banks and other creditors, two people familiar with the matter said.

NCLT took action following a petition filed by operational creditors to the company and appointed an interim resolution professional, prompting the financial creditors led by State Bank of India to swing into action.

Banks were initially not keen in going for insolvency proceedings, perhaps because the speed of resolution under the bankruptcy law has slowed.

“Banks were not initially keen to go for insolvency proceedings but later, they found potential in the company’s resolution exercise. The lead lender (SBI) took the initiative to change the insolvency resolution professional,” said one of the people cited above.

The number of cases admitted into NCLT but yet to be resolved increased to 816 as on September 30 from 723 as on June 30, rating firm ICRA said. About 30% of these cases have exceeded the 270-day timeline which was supposed to be the maximum timeframe allowed for the resolution process under the Insolvency and Bankruptcy Code.

Another 20% of the cases have crossed the 180-day timeline, the ICRA study showed.

Many insolvency professionals are said to have bid for the case, which has prompted banks to show interest. Lenders now want an RP of their choice and have sent feelers to some of them, a top chartered accountant approached by the lenders said.

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“Lenders have the right to seek a new RP under the law,” he said.

ICRA said that the average duration from the date of admission to the date of approval of the resolution plan to move the company to liquidation by the NCLT has been about 260 days for the cases completed so far. The process results in delays and disrupts cash inflows for the creditors, which in turn hampers their ability to deploy the funds in other return-generating avenues, the rating firm said.


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