Lanco Infratech stock tanks 20% on bankruptcy proceedings; SBI to discuss 6 other accounts today

Aseem Tribhuvan
Monday, 19 June 2017

Shares of Lanco Infratech Ltd (Lanco) tanked 20 percent to a new record low of Rs. 1.88 on the BSE after the company’s confirmation on Saturday that the Reserve Bank of India (RBI) has directed the company’s lead lender, IDBI Bank, to initiate a corporate insolvency resolution process under the Insolvency and Bankruptcy Code 2016 (IBC).

Shares of Lanco Infratech Ltd (Lanco) tanked 20 percent to a new record low of Rs. 1.88 on the BSE after the company’s confirmation on Saturday that the Reserve Bank of India (RBI) has directed the company’s lead lender, IDBI Bank, to initiate a corporate insolvency resolution process under the Insolvency and Bankruptcy Code 2016 (IBC).

Lanco is one of the 12 companies that the RBI has ordered banks to take to bankruptcy court in its efforts to cut India’s bad debts that have grown to Rs 9.63 lakh crore. According to the RBI, these 12 bad loan accounts make up 25%, i.e. Rs 2.5 lakh crore, of the Rs 9.63 lakh crore bad debts. Other accounts identified by RBI include Essar Steel, Bhushan Steel, Electrosteel Steel, Alok Industries, Jyoti Structures, Monnet Ispat and Jaypee Associates.

Bankers are supposed to meet today to finalise their next course of action on six of the 12 bad loan accounts for immediate referral to the National Company Law Tribunal (NCLT) after SBI, which is lead bankers in six of accounts identified by RBI, had called a meeting of lenders to arrive at a consensus on the resolution plan before initiating insolvency proceedings.

“The amounts mentioned…shall be read as Rs 8,146 crore for fund based outstanding exposure and Rs 3,221 crore for non-fund based outstanding exposure as on March 31, 2016,” Lanco Infratech said in a BSE filing.

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