Public money being stolen in NCLT resolution cases: Harsh Goenka

RPG Enterprises Chairperson Harsh Goenka on Tuesday said the NCLT should be the next institution to be cleansed by the government to prevent "hard earned public money being stolen" as companies' promoters stash away money on the side and get "80-90% haircut" from bankers during the insolvency resolution process.

In an apparent reference to recent cases of insolvency proceedings of some firms wherein creditors have taken huge haircuts on their dues, Goenka said it is the "new game in town".

Insolvency resolution plans require approval of the National Company Law Tribunal (NCLT).

While tagging the Prime Minister's Office, Goenka tweeted, "Promoters stash away money on the side, take the company to the cleaners, get an 80-90 per cent haircut from bankers/NCLT - that's the new game in town."

"A lot of institutions cleansed by the government - NCLT next please @PMOIndia. We can't have our hard earned public money being stolen!," he added.

His comments come in the backdrop of some insolvency cases being approved recently by the NCLT where creditors took heavy haircuts on their loans.

At present, the Chennai bench of the NCLT is hearing the insolvency case of Siva Industries, where the lenders of the company have accepted a one-time settlement by its former promoter C Sivasankaran offering just 6.5 per cent of the total debt of Rs 4,863 crore.

NCLT has asked the creditors to explain the rationale behind taking a 93.5 per cent haircut and just Rs 5 crore in upfront cash.

Earlier, this month NCLT had approved a Rs 2,962.02 crore bid of Anil Agarwal's Twin Star Technologies for the debt-ridden firm Videocon Industries and its 12 group companies.

While approving Twin Star Technologies' bid on June 9, NCLT had observed that creditors of Videocon Industries will be taking nearly 96 per cent haircut on their loans and the bidder is "paying almost nothing".

Videocon Industries and its 12 group companies had total admitted claims of Rs 64,838.63 crore.

Moreover, as per the resolution plan, two listed entities -- Videocon Industries and Value Industries -- would be delisted and their shareholders will receive "nil" money at the time of delisting as the liquidation values of the two firms are not even sufficient to cover the outstanding debt.