On 11th September, 2018, the Supreme Court grants an interim relief to stressed companies and stayed Reserve Bank of India’s Circular mandating banks to scrap all debt restructuring and begins insolvency process in case of delayed payment by a company even by a day. The apex court directed the Reserve Bank of India, banks to discontinue insolvency proceedings against the defaulters till its orders.
There are various stressed units in the power, textiles, sugar and shipping sectors which would be benefited from this order as they got time to look for alternative ways of resolution. As per the RBI Circular of Feb, 2018, borrowers had to identify projects with even a day’s default and go for a resolution plan within 180 days from the date of reference.
The Supreme Court has provided a big relief to the various stressed units including power, shipping and textile sectors. Now they would get time and look forward for alternative ways of resolution. The apex court will hear the matter again on 14th November, 2018.