Resolution Applicants for Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL) may have to propose minimum upfront cash recovery of ₹500 crore in their Resolution Plan(s) for the consolidated Committee of Creditors to evaluate their plan(s).
Further, the Resolution Applicants (RAs) may be required to offer Performance Bank Guarantee (PBG) equivalent to 5 per cent of the aggregate resolution amount proposed under the Resolution Plan(s), subject to a minimum amount of ₹560 crore.
The RAs may also need to stump up ₹150 crore as earnest money deposit (EMD), said sources aware of the contours of the corporate insolvency resolution process (CIRP) for the Kolkata-based SREI Group.
The Administrator for SIFL and SEFL (corporate debtors) has shortlisted 14 prospective resolution applicants, including Vedanta Ltd, Assets Care & Reconstruction Enterprise Ltd, Asset Reconstruction Company (India) Ltd, International Asset Reconstruction Company Pvt Ltd, JM Financial Asset Reconstruction Company Ltd, Arena Investors, LP, Jindal Power, Prudent ARC, and Edelweiss Alternative Investment Advisors.
The aforementioned RAs are required to submit their Resolution Plans by May 17.
The SREI Group’s secured loans (other than debt securities), comprising Term Loans, Working Capital Facilities and Collateral Borrowings, stood at ₹25,703 crore as on March 31, 2021.
Further, the outstanding in debt securities and secured debentures stood at ₹2,441 crore and ₹2,403 crore, respectively, as on March 31, 2021. Unsecured loan (other than debt securities and subordinated liability) stood at ₹772 crore as on March 31, 2021, as per SIFL’s FY2021 annual report.
Distribution of cash
The Resolution Plan submitted by RAs is expected to provide for distribution of the aggregate cash balance of the Corporate Debtors. The cash balance will pass through to the financial creditors and be for their benefit.
These amounts cannot be used for offering, or considered towards calculation, of upfront cash recovery, said sources.
Further, equity, if any, allotted to assenting financial creditors as part of the Resolution Plan will not exceed 49 per cent of total equity of the Corporate Debtors.
The Reserve Bank of India (RBI) had superseded the Board of Directors of SIFL and SEFL (a wholly owned subsidiary of SIFL) on October 4, 2021, owing to governance concerns and defaults in meeting their various payment obligations.
Rajneesh Sharma (Ex-Chief General Manager, Bank of Baroda) was appointed as the administrator of these companies.
The central bank had filed applications for initiation of corporate insolvency resolution process against SIFL and SEFL on October 08, 2021, under the Insolvency and Bankruptcy Code (IBC), 2016, at the Kolkata Bench of the National Company Law Tribunal.
Srei reported a turnaround performance in the third quarter ended December 31, 2021, reporting a net profit of ₹69.82 crore against a net loss of ₹3,810.93 crore in the year ago period.