However, a successful outcome is far from easy as any settlement with promoters under Section 12A of Insolvency and Bankruptcy Code (IBC) needs approval from 90% of lenders.
Promoters of Gayatri comprising former Rajya Sabha MP T Subbarami Reddy and his family have filed an intervention petition in National Company Law Tribunal (NCLT), Hyderabad following the liquidation plea by banks as the only bid for the company received so far was below expectation.
“The company has filed a plea against liquidation and is seeking a settlement. The offer is not very different from what lenders got through a bid process but here the promoters have committed to ensure that the bank guarantees associated with this account are not encashed which is a substantial comfort for banks,” said a person aware of the details.
Lenders moved NCLT in January for liquidation, rejecting the sole bid from private equity firm Mark AB Capital Investment offer of ₹650 crore, of which only ₹50 crore was in cash upfront. Of the total dues, more than ₹3,000 crore is linked to guarantees given by the company. These include guarantees for distressed projects being executed by Gayatri like Indore Dewas Tollways and subsidiary Sai Maatarini Tollways though they comprise a smaller portion of bank debt. Both projects have been terminated by National Highways Authority of India with arbitration claims pending.”Total direct dues from the company could be about ₹5,500 crore. This being an EPC company, there are no assets on the ground, so recovery chances are almost nil. Banks are in fact worried that they may have to pay back to government agencies if these guarantees are invoked, so this offer by the company to take care of those dues is a positive,” said the person cited above. Canara Bank is the largest creditor with 23% of total dues totalling ₹1,911 crore, followed by Bank of Baroda with 15% at ₹1,382 crore. There are 14 secured creditors also including non-banking financial companies like Srei Equipment Finance, IL&FS Financial Services, Sundaram Finance and Tata Motors Finance.Resolution professional Sai Ramesh Kanuparthi did not respond to ET’s email seeking comment.”These are still early days. There are also discussions going on with National Asset Reconstruction Company to see if we can get a better offer. Banks have to be abolutely sure of how and from where the promoters are bringing money, so this is far from a done deal. Though any settlement with the promoters is better than liquidation,” said a second person aware of the details. Lenders will need soft approval from all large creditors before considering the promoters’ offer and will need approval from 90% of creditors for going ahead with settlement.
“It’s a long-drawn process and will take months to get all on board once creditors are sure of the promoters’ intent. Banks on their own do not have the 90% vote, so other NBFC creditors will have to be roped in,” said the first person cited above.