The Supreme Court on September 11, 2018 (Tuesday) consolidated all cases by members of the Association of Power Producers (APP), Independent Power Producers Association of India (IPPA), Shipowners Association and Textile Associations filed across the country to be heard on November 14, 2018. The Court has meanwhile, asked RBI and parties to maintain status quo with regard to insolvency proceedings against these companies. The bench, comprising Justices RF Nariman and Indu Malhotra, has also directed that the 12 cases related to this issue that is pending before different high courts should be transferred to the Supreme Court.
In Februarys, Reserve Bank of India scrapped all earlier existing frameworks for revitalizing distressed assets such as Corporate Debt Restructuring (CDR) scheme, Flexible restructuring of long-term project loans (5/25) scheme, Strategic Debt Restructuring (SDR) scheme, Scheme for Sustainable Structuring of Stressed Assets (S4A). The Joint Lenders’ Forum (JLF) as an institutional mechanism for resolution of stressed accounts also now stands discontinued and substituted the existing guidelines and made IBC as the main tool to deal with defaulters. The harmonized and simplified generic new framework requires the lender to classify a loan as a Non-Performing Asset (NPA) immediately upon restructuring. All accounts, including such accounts where any of the schemes have been invoked but not yet implemented, shall also be governed by the revised framework. Besides, lenders were asked to finalise a resolution plan in case of a default on large accounts of Rs 2,000 crore and above within 180 days, failing which insolvency proceedings have to be invoked against the defaulter.
The recovery process by banks against power sector as well as some sugar, shipping, and textile companies could be delayed further due to a Supreme Court stay order. There are a sizeable number of power sector loans which amounts to Rs.2 lakh crore languishing in various stages of resolution and recovery.
