The National Company Law Tribunal (NCLT) has turned down the appointment of Vijaykumar V Iyer of consultants Deloitte as an interim resolution professional (IRP) to resolve the Rs 44,000-crore Lanco InfratechBSE -4.55 % default, putting an end to big firms taking up multiple assignments that they cannot do justice to.
An individual who is already an IRP for two other companies will not be able to find sufficient time to act as IRP for Lanco, which is already a complicated case, the Hyderabad bench of the NCLT said. The case has to be dealt with in a time bound manner hence it may not be possible if an individual takes up more cases, it said.
“This shows that the court is now becoming aware of the fact that the job of IP is going to limited number of people,” said Sameer Kakar, an insolvency professional.
This ruling could become a benchmark for those bidding to be resolution professionals in multiple cases. Since the process is new, the big four accounting firms such as EY, KPMG, PwC and Deloitte have been getting mandates to handle many big cases.
The lack of infrastructure elsewhere and experience makes them an easy choice for banks too which are also new to the system.
Bankruptcy courts are bustling with hundreds of cases under the new IBC. Attention is on these NCLTs after the Reserve Bank of India ordered top 12 defaulters be tried under the law.
Lanco is among the 12 cases directed by Reserve Bank of India to be referred to bankruptcy court for speedy resolution. So far, in all large cases, banks have appointed large consulting firms like EY
The counsel for Lanco Infratech objected to appointment on grounds that just last week, Iyer was appointed as IRP for Binani Cement as well as Bhushan SteelBSE -2.11 % – which have a combined loan of Rs 50,000 crore.
The court observed that there is a serious concern about that availability of the IRP to effectively perform his functions, verify numerous claims and run the company “whose debt structure and operations are very complicated and complex.”