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Shriram EPC goes into insolvency, calls off Friday Board meet

NCLT bench of Chennai has accepted the plea of Asset Care company, which had earlier bought over the debt of DBS Bank

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Shriram EPC, one of the country's major construction players, has gone into liquidation after the company failed to prevent Asset Care & Reconstruction Enterprise, an asset reconcstruction company, from initiating the insolvency process.

With the Chennai-headquartered project executioner going into the hands of a Resolution Professional Sanjeve Deora, Shriram has been forced to cancel its earnings board meet scheduled to be held on Friday.

Shriram EPC is the second large construction company in the country after IVRCL that has now gone into insolvency mode.

With aggregate claims against IVRCL touching Rs 13,406 crore, the Hyderabad-based diversified construction major's deadline to attract potential buyers ended on Thursday.

Shriram had earlier successfully prevented the insolvency process initiated last year by one of its operational creditors Rio Glass Solar.

The National Company Law Tribunal (NCLT) bench of Chennai has accepted the plea of Asset Care company, which had earlier bought over the debt of DBS Bank.

DBS Bank had extended long-term debt to Shriram which turned into a non performing asset in 2014 following which the Joint Lenders' Forum provided a moratorium of two years.

But after the moratorium period ended, Shiram EPC failed to repay installments beginning July 2016.

In March 2017, DBS sold off its debts amounting to Rs 155.01 crore to Asset Care through an assignment agreement. The unpaid dues including accured interests till December has ballooned to 171.12 crore, data filed with the NCLT shows.

After Shriram EPC was dragged to NCLT, it argued that the assignment agreement between DBS and Asset Care was in derogation of CDR Scheme.

"It is not mandatory even under Insolvency and Bankruptcy Code proceedings for financial creditor to be a part of the Committee of Creditors to enforce its security interest. Hence the contention of the corporate debtor that the assignment is not valid as it is not in terms of RBI's master circulars can't be sustainable," NCLT bench said in its order.

In August 2017, the company managed to get a stay from the National Company Law Appellate Tribunal on a ruling on the appointment of an insolvency professional following a mode by creditor Rio Glass Solar SA.

NOT THIS TIME

  • NCLT bench of Chennai has accepted the plea of Asset Care company, which had earlier bought over the debt of DBS Bank
     
  • Shriram had earlier successfully prevented the insolvency process initiated last year by one of its operational creditors Rio Glass Solar
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