Greetings to all on behalf of the entire team of SB Partners.
The last four months have seen several substantial changes in the areas of Capital Markets, Banking and Finance and Corporate Laws.
Most notably, the RBI issued the ‘Prudential Framework for the Resolution of Stressed Assets’ in light of the Supreme Court decision to revoke the previous circular dated February 12, 2018. The new framework introduces a few significant changes. It now extends its application beyond Scheduled Commercial Bank, and also includes, ‘All India Term Financial Institutions’, ‘Small Finance Banks’ and certain ‘NBFCs’. Further, the resolution process, unlike the previous framework, is now voluntary in nature. It is up to the Lenders to determine which route to opt to resolve the stressed account. Also, RBI can now give directions to Banks to commence the ‘corporate insolvency resolution process’ under IBC, in case of specific defaults only.
Further, the new framework now provides a review period of thirty (30) days prior to the initial one hundred and eighty (180) day resolution timeline within which lenders are required to undertake a prima facie review of the borrower account. If, during the review period, the lenders chose to implement a resolution plan under the IBC, the new framework mandates the signing of an inter-creditor agreement between all lenders during the review period itself to provide for ground rules for finalisation and implementation of the resolution plan. In an effort to minimize the losses of the lenders dissenting to a resolution plan, the framework requires that no dissenting lender shall receive an amount lesser than the liquidation amount that was due to them.
In addition to the foregoing, this issue of ‘Lex Novus’ also focuses on other key regulatory developments in the field of Capital Markets and Corporate Laws. SEBI reduced the minimum subscription requirement for Real Estate and Infrastructure Investment Trusts. The amendments areaimed at providing flexibility to the issuers in terms of fundraising and increasing the access of these investment vehicles to prospective investors.
We hope you find this edition of Lex Novus informative and insightful.
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