In a hearing on Tuesday the Delhi NCLT granted interim moratorium and confirmed Reshma Mittal as resolution professional (RP) in a petition filed by lead lender State Bank of India (SBI). The RP will now verify the details of the case and seek a final nod from the NCLT to start prosecution.
This is the second high profile insolvency case admitted after similar proceedings were initiated against Videocon promoter Venugopal Dhoot on September 1.
Singals or their lawyers could not be reached immediately.
Cyril Amarchand Mangaldas is representing SBI in the case. Biswajit Dubey appeared on behalf of the law firm on Wednesday.
Banks’ efforts at maximising recoveries have been boosted after Supreme Court’s endorsed invoking personal guarantees of defaulting promoters in May filling an important loophole in the bankruptcy law.
The apex court was hearing over 70 petitions and challenges to the invocation of personal guarantees bundled up together and heard by the apex court including BPSL’s Sanjay Singal.
Banks led by SBI had initiated personal insolvency proceedings against the Singals along with others including Videocon promoter Dhoot as far back as January. The Supreme Court’s order later in May has quickened the process.
Banks have so far recovered Rs 19,350 crore from BPSL after JSW Steel completed the acquisition of the company in March 2021 after a resolution process which lasted three-and-a-half-years.
To be sure, banks took a 60% haircut to resolve the loan. BPSL was among the 12 large cases referred to bankruptcy courts by the Reserve Bank of India in 2017. The company owed lenders Rs 48,000 crore.
Bankers have vowed to maximise recovery from bad loans by invoking personal guarantees on wealthy promoters who otherwise would not bear the losses for the failure of their businesses.
