Sajjan Jindal, chairman of JSW Group on Tuesday, reiterated his stand that the ongoing insolvency and bankruptcy code process will suffer a setback if the existing promoters of the assets reacquire them without the ‘Right to Recompense’ to banks
Sajjan Jindal, chairman of JSW Group on Tuesday, reiterated his stand that the ongoing insolvency and bankruptcy code process will suffer a setback if the existing promoters of the assets reacquire them without the ‘Right to Recompense’ to banks. Taking to social media platform again, Jindal through a series of strongly worded tweets said the government should closely monitor National Company Law Tribunal (NCLT) proceedings. “It will be a setback to the credible IBC process if the existing promoter reacquires the asset with a haircut without Right of Recompense to Banks. The government must closely monitor the proceedings of #NCLT @FinMinIndia @arunjaitley @rsprasad @PMOIndia,” he tweeted. “A strong monitoring mechanism with Right to Recompense may be put in place for Promoters other than dubious, willful / non-cooperative defaulters who wish to participate in the #IBC process. #NCLT @FinMinIndia @arunjaitley”, he added. Earlier too, after the guidelines for due diligence norms of IBC were modified, Jindal had said dubious promoters should not be allowed to submit the rehabilitation plan to prevent misuse. “The bidding criteria also should be spelt out explicitly prior to inviting the bids. This will avoid likely litigation,” he tweeted.
JSW Steel and Tata Steel are among the leading Indian companies that have shown strong interest in buying some of the stressed steel assets, the cases for which have been admitted by NCLT. Jindal has been actively voicing his views on the IBC proceedings on Twitter for the past few days. Earlier this month, Jindal had made the case for disclosing bid eligibility and evaluation criteria upfront and that it should be applied uniformly in all accounts. “It’s important as we cannot have different criteria for different companies,” he tweeted.
Seshagiri Rao, joint MD and group CFO, JSW Steel, has also said there should be a distinction made between the promoters who are wilful, who are dubious and the promoters who have worked in the interest of the company and the shareholders, but are facing challenges due to external factors. He said there should not be a situation where the promoters who are responsible for pushing the firm towards insolvency get it back after taking large haircuts. However, according to the legal fraternity, making that distinction is not going to be easy. Rajesh Narain Gupta, managing partner, SNG & Partners, said if the bank declares someone a wilful defaulter, it often happens that the same is challenged before the court and then it becomes questionable if the said person can be treated as a wilful defaulter till the matter is decided. “This may have repercussion on the new ordinance being proposed where wilful defaulter cannot bid. Even in those cases where the wilful defaulter is denied bidding and where the amount offered by him is far more or the proposal is superior than the other bidder, the matter becoming contentious cannot be ruled out,” Gupta added.