New Delhi, July 7: Banks are likely to now move the National Company Law Tribunal against Mumbai-based ABG Shipyard, which owes them a whopping Rs 6,953 crore.
Armed with the government's insolvency and bankruptcy code, banks have already dragged Jyothi Structures to the tribunal for their dues but were thwarted in the case of Essar Steel by a high court ruling filed by the Ruias.
Bankers, who have been in talks with the RBI and the finance ministry officials, are now planning to move against the other 10 companies in the RBI's list of 12 big defaulters - and one of the first is ABG Shipyard.
In all, the RBI recently named 12 non-performing assets for resolution and these dozen bad debts totalled over Rs 2.2 lakh crore.
Earlier this week, ABG Shipyard had reported a net loss of Rs 822 crore for the quarter ended December 2016 and admitted the company was in "deep financial crisis".
ABG had suffered a net loss of Rs 1,266.22 crore during the corresponding quarter of 2015-16.
In a filing before the BSE, the company said: "The company is in deep financial crisis and its operations are closed, barring ship repair business at a very low level. The Dahej Yard is shut for the last two years with labour and staff taking part in agitations.
"With this the management of the company has witnessed a high attrition rate of employees and scant available resources. Hence, the company could not prepare and publish its financials in time."
To add to the shipyard's woes, the government also cancelled contracts for naval vessels which it had earlier awarded to the shipyard.
ICICI Bank, which is the lead lender of a consortium of 22 banks who have lent money to the shipyard, has been asked by the other lenders to prepare a resolution plan and it has selected BDO International to do the job.
Lenders together now control 51.43 per cent of the shareholding of the shipyard after an earlier attempt at debt resolution last year. Lenders had then compulsorily traded their convertible preference shares for equity.
Officials said ABG Shipyard is not against a resolution which could be in the form of a strategic investor taking over the shipyard.
"The problem will be in finding someone with deep pockets who can turn it around. The other private sector shipyards may not be willing to shoulder the huge monetary implications of turning this sick yard around," said officials.
Officials said a number of options were available including looking for a global player to take over ABG. Another option is for Indian Navy managing operations, without taking over the debt or equity.
"The government will never agree to taking over a private shipyard, but one possibility could be the navy running the yard for the banks. But ideally the banks would prefer a clean deal with some firm taking over, even if that means a huge haircut (writing off dues) for them," officials said.
Under the bankruptcy process, once a company is referred to the tribunal, the lenders have 180 days to devise a resolution plan. If 75 per cent of the creditors agree on such a plan, the term can be extended by 90 days. If this does not happen, the insolvency code allows the liquidation of the company.
The other stressed accounts are Bhushan Steel, Lanco Infra, Essar Steel, Bhushan Power, Alok Industries, Amtek Auto, Monnet Ispat, Electrosteel Steels, Era Infra and Jaypee Infratech.
Meanwhile, unfazed by the Gujarat high court order staying bankruptcy proceedings against Essar Steel, the finance ministry has asked banks to maintain zero tolerance against bad loans and be prepared to fight cases to resolve large NPAs or non-performing assets.
The ministry has been asking banks to take tough action against such borrowers and be ready to fight court cases as well, official sources said.
The adjournment of the Essar Steel case by the high court to July 12 will not deter banks or halt insolvency proceedings against other 11 cases, they added.
