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SIDBI puts brake on recovery of Rs 24,000-cr loans from Alok Industries

Bankers hoping to recover Rs 24,000-crores loan from Alok Industries are in a fix with the Small Industries’ Development Bank of India (SIDBI) filing a winding-up petition against the company in the Bombay High Court. The bank has filed the petition under Sections 433 (E), 434 and 439 of the Companies Act seeking to wind up Alok Industries and liquidate its assets. According to sources, SIDBI is not part of the 30-lender consortium to the company and is, therefore, classified ‘other lender’ in its annual report.

Earlier, efforts to initiate a strategic debt restructuring (SDR) scheme has had no results because the Bombay HC stayed the company’s sale of assets and change in its equity structure after HSBC filed a winding-up petition against it. The London-based bank had filed the petition on behalf of unsecured lenders like VTB Capital to settle the outstanding dues worth $55 million. Other petitioners include Barclays Bank, Shreeji Steel Traders, Netherlands Development Finance Company (FMO) and Global Tradinglinks.

Alok Industries is currently ineligible for a loan recast even under the revised rules for sustainable structuring of stressed assets (S4A) scheme. It has been recently reported that a techno-economic viability (TEV) study found sustainable debt to be at Rs. 10,800 crores, slightly less than 50 per cent of the firm’s total debt.

Bankers, however, are hopeful that the RBI will respond favourably to suggestions asking for some relaxations in the formula for calculating the sustainable debt. Currently, lenders can invoke the S4A only in companies where 50 per cent borrowings are sustainable or can be serviced by current cash flows.

 
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