The Chennai bench of the National Company Law Tribunal (NCLT) has grilled IDBI Bank again over one-time settlement (OTS) deal reached between the IDBI Bank-led bank consortium and Siva Industries and Holdings Ltd (SIHL), Zee Biz reported.
The bench last week questioned the alacrity being shown by the lead lender IDBI Bank as the central bureau of investigation (CBI) has charged C Sivsasankaran in a loan fraud case of IDBI Bank.
The bench also asked the bank consortium in what capacity did the proposer give the settlement plan and the 'real intent' behind the OTS offer.
The Tribunal also sought explanation if the proposal could be admitted under the law.
Some serious allegations and questions have been raised with respect to the Siva Industries and Holdings case that has grabbed the limelight because public sector banks (PSBs) have agreed to settle with the promoter of Siva Industries a huge loan of Rs4,863 crore at just Rs323 crore with a recovery of only 6.5%, Zee Biz reported earlier.
As per the report, interestingly the CoC member and biggest bank of the country State Bank of India (SBI) dissented against the settlement proposal.
Moreover, the case becomes even more important when the lenders are withdrawing the bankruptcy process of Siva Industries and Holdings.
Further, the important to note here is the settlement amount accepted by banks is said to be even lower than the liquidation value of Siva Industries and Holdings and it will result in a loss of approximately Rs4,700 crore public money, the report added.
Additionally, the public sector bank Canara Bank privately sold its exposure of Rs1,148 crore to an ARC – International Asset Reconstruction Company Private Limited (IARC).
It is feared that this case will set a bad precedent and defeat the purpose of the Insolvency and Bankruptcy Code, 2016. As if things are to be settled outside court with such a meager sum, then IBC may lose its relevance.
Interestingly IDBI Bank as the lead banker is settling the case with the same promoter who was earlier charged by CBI for defrauding the same lender to the tune of Rs600 crore along with the other then posted senior officials of the Bank, the report said.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.