Context:
The National Asset Reconstruction Company Limited (NARCL) under the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act is pleased to announce that most of the lenders have assigned loan accounts of India’s biggest bulk tea producer, McLeod Russel India, to NARCL.
This should streamline and speed up the debt resolution process concerning the troubled tea producer.
The National Asset Reconstruction Company Limited (NARCL)
The National Asset Reconstruction Company Ltd or NARCL is the name of the asset reconstruction company incorporated to take over and dispose of the stressed assets of commercial banks. Stressed assets of commercial banks worth Rs 2 lakh crore have been identified to be taken up in the first phase by the NARCL.
Another Assignment Explained
- The results of an Assignment Agreement executed on March 12, 2025, signify that ICICI Bank as lead bank and seven other banks (SBI, HDFC Bank, Axis Bank, PNB, UCO Bank, Indian Bank, RBL Bank) have assigned their loan accounts to NARCL.
- Thus, NARCL has now become the lender and secured creditor for the loans, with full rights, securities, and guarantees associated with them.
- IndusInd Bank is the only member in the consortium that has not taken part in the assignment.
Modified Debt Settings
- Total principal outstanding: ₹1,461.06 crore.
- Earlier, Yes Bank had assigned its loan to JC Flowers ARC, now holding a 24.39% share of McLeod’s debt.
- IndusInd Bank holds 4.90% shares.
Swiss Challenge to Bid Process Attempt
- Debt assignment/expression of interest was invited by lenders in December 2024 for selling/assigning debts aggregating to ₹1,104.69 crore, with a reserve price of ₹700 crore.
- This process did not attract any bids.
Restructuring Prospects
- With fewer lenders (NARCL, JC Flowers ARC, and IndusInd Bank), this might give McLeod Russel room for a detailed restructuring roadmap.
- The talks for a debt restructuring arrangement have been going on for almost six years but with no visible progress.
Legal Roadblocks and Circumstances Surrounding Previous Attempts
- Lenders and creditors have had cases here in the Debt Recovery Tribunal (DRT) and under the Insolvency and Bankruptcy Code, National Company Law Tribunal (NCLT), Kolkata.
- Supported by Carbon Resources, McLeod had submitted four proposals, one of which included a settlement on a one off basis, but these did not go forward.
Future Prospects
As the tea season starts, fresh restructuring ought to be in tune with the market and strive for long term viability. The consolidation of the various lender accounts under NARCL is considered a favourable sign for resolution, potentially bringing closure to a long standing six year battle.
Source: BS
