India

Fraudulent transactions worth Rs 17,394 crore happened at debt-ridden mortgage firm DHFL during FY07 to FY19, according to transaction auditor Grant Thornton, Business Today reported. Earlier this year, the administrator of Dewan Housing Finance Corporation Limited (DHFL), appointed under the Insolvency and Bankruptcy Code (IBC), obtained assistance from Grant Thornton to conduct investigation into the affairs of the mortgage firm. Last year, the Mumbai bench of the National Company Law Tribunal (NCLT) had admitted the company for insolvency resolution.

Hospitality firms sitting on large debt piles are now looking to go for a one-time restructuring, with the moratorium period now over, Business Standard reported. On account of being highly leveraged, 15 per cent of the total 160,000 rooms —nearly 24,000 — are facing the risk of permanent closure, show industry estimates. The hospitality sector, by nature, has a high fixed cost structure and the lockdown led to significant erosion in revenues and margins. The industry now has its eyes set on the recommendations of the KV Kamath Committee.

The Securities and Exchange Board of India (Sebi) Wednesday allowed mutual funds to side pocket debt in cases where borrowers have approached the Asset Management Company (AMC) for debt restructuring, Mint reported. Earlier, SEBI rules only permitted debt downgraded below investment grade (rating below BBB-) or defaulted debt to be restructured. The new circular, which will be in effect till 31st December will allow even higher rates debt to be side pocketed. The date on which the restructuring proposal is received by the AMC is to be treated as the trigger date for side pocketing.

While the new board of IL&FS and the directors appointed by it on the subsidiaries of Infrastructure Leasing & Financial Services Limited (IL&FS) have immunity from prosecution in India for the actions of the group in the past, they may not have the same protection in cases filed against the group firms outside the country, The Indian Express reported.

India’s top court approved a plan giving phone companies 10 years to pay back a combined 1.4 trillion rupees ($19 billion) in outstanding fees, a significant concession from the original three month deadline but only half the time the carriers had sought, Bloomberg News reported. A three-judge panel on Tuesday said 10% of the dues must be paid in the first tranche and the written judgment, which is awaited, will provide more details on the repayment structure. Prime Minister Narendra Modi’s government had proposed a 20-year repayment window, which the telecom companies had supported.

India has rolled out a fresh plan to tackle an old problem: the mountain of bad loans held by its banks, Bloomberg News reported. With the pandemic forecast to push soured assets to a two-decade high, Prime Minister Narendra Modi is struggling to find cash to support the state-run lenders that hold most of it, and to spur credit to a shrinking economy. Most of the risky debt is concentrated in two sectors -- telecoms and utilities -- that are vulnerable to the economic slowdown, meaning if they face more trouble, then a massive amount of debt goes bad.

A single-member bench of the National Company Law Tribunal (NCLT) can’t hear and decide on a company when the law requires a division bench, including both judicial and technical members, to constitute the adjudicating authority, The Economic Times reported. Indore-based Indison Agro Foods Ltd, which is facing insolvency resolution by Allahabad Bank in the Ahmedabad NCLT, had approached the National Company Law Appellate Tribunal (NCLAT), seeking appellate tribunal’s intervention for referring the matter to a division bench.

The Department of Telecommunications has moved the National Company Law Appellate Tribunal challenging UV Asset Reconstruction Co.’s Rs 6,630 crore resolution plan for the bankrupt cellular operator Aircel Ltd, arguing that the plan doesn’t address the “huge amount” of dues owed by the company against fees for telecom license and right to use spectrum, BloombergQuint reported. The appellate tribunal has directed the parties to file affidavits within five days and will next hear the matter on Sept. 11.

The wrecking power of Covid-19 was on clear display today as India announced a new world record for daily infections followed by a 23.9 per cent plunge in gross domestic product for the second quarter — the biggest contraction of any major Asian country, the Financial Times reported. India’s economy was already in a weak state before the virus hit, but the world’s biggest lockdown further hammered sectors such as manufacturing and construction and brought business activity to a near standstill.

Markets regulator Sebi on Monday asked credit rating agencies not to consider as default the restructuring of debt done solely due to COVID-19 related stress by lenders, The Economic Times reported. The move comes after the Reserve Bank of India (RBI) provided a loan restructuring window for corporates following bankers' and industry's demand. As per RBI, restructuring will be allowed as per the prudential framework issued on June 7, 2019.