M&A Magazine

A consortium of 26 bankers led by State Bank of India (SBI) have finally decided to take the grounded Jet Airways to bankruptcy court after failing to revive the company and find buyers. Insolvency proceedings have been initiated against debt-ridden Jet Airways, which stopped flying on April 17. Before the bank consortium filed the bankruptcy proceedings for Jet Airways, two operational creditors – Shaman Wheels and Gaggar Enterprises – had already taken the airlines to National Company Law Tribunal ( NCLT ) as the airline owes Rs 8.74 crore and Rs 53 lakh to the two companies, respectively. After the airline stopped flying, most of its domestic and international slots have been given away to other airlines by the government. Jet Airways will be the first airlines company in the country to go into bankruptcy, as it owes over Rs 8,000 crore to banks and thousands of crores to vendors, lessors and employees. Jet Airways was started by airline-ticketing-agent-turned-entrepreneur N...

Tata Steel has acquired Bhushan Steel (BSL) through its wholly-owned subsidiary Bamnipal Steel Ltd (BNL) through a resolution under the Insolvency and Bankruptcy Code ( IBC ) . Tata Steel has taken a controlling stake of 72.65% in BSL and paid the admitted corporate insolvency costs and employee dues, as required under IBC. Bhushan steel was one of the few resolved amongst 12 companies recommended by RBI under Insolvency and Bankruptcy Code . Tata Steel Ltd (TSL) is part of Tata Group and a public limited company engaged in the business of manufacturing steel and offers a broad range of steel products including a portfolio of high value-added downstream products such as hot rolled, cold rolled and coated steel, rebars, wire rods, tubes and wires. The equity shares are listed on BSE and on NSE. The market cap of the company is Rs 57,123 crores (approx.). Bamnipal Steel Limited (BNL) is a public limited company incorporated on January 19, 2018 formed as an SPV (Special Purpose...

The Center has set up National Company Law Tribunal ( NCLT ) on June 1, 2016 to look into cases relating to insolvency and bankruptcy of companies, especially those that have a huge bank debt. It works like the courts of law in the country and determines the facts of each case and decides in accordance with principles of natural justice. There were multiple petitions filed with NCLT benches by Tax departments pertaining to treatment of their dues during the Corporate Insolvency Resolution Process ( CIRP ) under Insolvency and Bankruptcy Code ( IBC ), 2016. Why taxman is running to NCLT for relief? ·          Adjudicating Authority has granted huge Income Tax benefits to the Respondent- ‘Synergies Castings Ltd.’ without impleading the Appellant department as a Respondent to the said proceedings. ( No. 205 of 2017 - Synergies Dooray Automotive Ltd. & Ors. ) ·          The grievance of...

Mergers and acquisitions (M&A) have got a leg up, thanks to rising cases filed under the Insolvency and Bankruptcy Code (IBC) . Till the last count, M&A deals in distressed asset sales worth around $14.3 billion were done since the code became functional in December 2016, according to data from Kroll and Mergermarket. Such sales will rise as more and more companies line up to face the new bankruptcy law. Data from Insolvency and Bankruptcy Board of India show that more than $26 billion in distressed steel assets are coming on block, while banks are unwilling to take more haircuts and more companies will be put under the IBC and make their way through the NCLT process. In fact, opportunities for investors and acquirers have grown as quality assets at attractive valuations come to market. Distress M&As account for 12% of the total M&A value this year, led by deals involving Bhushan Steel ($7.4 billion).  In terms of actual deals, distressed M&As has ac...

Ever since the government introduced the bankruptcy law, host of companies right from steel, power, cement and construction have put their distressed assets on sale and potential bidders are chalking out deals to snap up assets of loan defaulting companies. The wave of deal-making can push mergers and acquisitions (M&A) at a record high level this year. With banks pushing for change in management of loan defaulting companies, that will result in bigger corporate assets which will be available for acquisition at a throw-away price. Swift, time-bound resolution or liquidation of stressed assets will be critical for de-clogging bank balance sheets and for efficient reallocation of capital. Stressed assets are in multiple sectors, so M&As are expected to happen in multiple sectors. Rising stressed assets with banks The Reserve Bank of India has mandated early bankruptcy resolution of 12 cases, which account for a bulk of the stressed assets of banks.   These cases ar...