Srei administrator Rajneesh Sharma has rejected the group promoters' offer under section 12A of Insolvency and Bankruptcy Code (IBC) to pay off dues of around Rs 32,000 crore to creditors to withdraw their companies from the ongoing insolvency process, sources said on Monday.
Section 12A allows erstwhile management of corporate debtors to settle matters between creditors and withdraw cases under Corporate Insolvency.
Srei Equipment Finance Ltd and Srei Infrastructure Finance Ltd are currently undergoing insolvency proceedings in NCLT. The RBI has already superseded the respective boards earlier.
"The offer was rejected on technical grounds. The offer should have been sent to the Reserve Bank of India which is the applicant to NCLT for the insolvency proceedings and not to the administrator," a top source aware of the developments said.
The voting process on the three resolutions is on track and it will continue till February 14. The Committee of Creditors is expected to finalise one among the three prospective resolution applicants who are in the fray for the Srei twin companies.
Sharma declined to speak on the matter.
"Both RBI and the Committee of Creditors (CoC) have to accept the offer under the section. It is very unlikely that their offers will be accepted. Back in 2020, there was a similar proposal from the promoters under Section 230. But the offer was rejected, as there are allegations of fraud," the source said.
The latest offer from the Kanorias was the highest with a net present value of Rs 7,000 crore, including upfront cash of Rs 3,500 crore. While the rest of the entire debt will be repaid through a combination of financial instruments such as cash, non-convertible debentures, optionally convertible debentures, and equity over a period of five years.
Reacting to the development, a spokesperson of the Kanorias said, "While we have not received any formal intimation as yet, it would be preposterous for the administrator or the bankers to reject a proposal which is highest in value and merit. We have followed due process after legal understanding by experts."
After the completion of the challenge mechanism process, the Srei companies received three bids. The state-backed National Asset Reconstruction Company Ltd (NARCL) offered a Net Present Value bid of Rs 5,555 crore. Authum Investment and Infrastructure's bid was for Rs 5,526 crore while the consortium of Varde Partners and Arena submitted a financial bid of approximately Rs 4,680 crore.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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