IBC'S EXISTENTIAL PROBLEMS

WITH LIQUIDATIONS SURPASSING RESOLUTIONS, BANKERS NEED TO LOOK AT ALTERNATIVES TO THE BANKRUPTCY CODE.

- V. Keshavdev

MOVE OVER Nirav Modi and Vijay Mallya, and Rishi Agarwal - - a new poster boy is here to take the top honours for pulling a fast one on bankers. The Central Bureau of Investigation (CBI) in the last week of June booked Kapil Wadhawan and Dheeraj Wadhawan of DHFL for defrauding banks of ₹34,615 crore, making it the biggest fraud case probed by the central agency. Prior to the Wadhawans, Agarwal, the 56-year-old owner of Surat-based ABG Shipyard, was under the CBI lens for allegedly duping a 28-bank consortium of ₹22,842 crore by diverting funds to promoter-connected entities. Before Agarwal, diamond traders Nirav Modi and his uncle Mehul Choksi had topped the fraud league table with over ₹14,000 crore in dues, followed by Vijay Mallya at ₹9,900 crore.

What makes the ABG case stand out is that it is one of the dirty dozen bad loan accounts that were referred for resolution under the Indian Bankruptcy Code 2016, following the Reserve Bank of India's (RBI) diktat in June 2017. Incidentally, since 2013, bankers have been struggling with the ABG account. After trying a loan recast under the Corporate Debt Restructuring mechanism in March 2014, it was declared NPA in 2016 and admitted under insolvency proceedings in August 2017. In April 2018, the NCLT (National Company Law Tribunal) passed a liquidation order and in the same month, Ernst & Young was appointed by the consortium for a forensic audit. After the liquidator failed to find buyers, the account was declared fraud in April 2019.