Congress Demands White Paper on Bankruptcy Process; Accuses Government of Sheltering Defaulters
Moneylife Digital Team 28 March 2022
The Congress party has asked for a comprehensive white paper on the bankruptcy proceedings while accusing the government of protecting defaulters through huge write-offs through the insolvency process via the Insolvency and Bankruptcy Board of India (IBBI).
Addressing a press conference on 27th March in New Delhi, senior Congress leaders Sanjay Nirupam and party spokesperson Pawan Khera reeled out specific examples of massive write-offs such as Ruchi Soya, Amtek Auto, ABG Shipyard, Alok Industries, Videocon group and Anil Ambani-led Reliance. Mr Nirupam demanded a Central Bureau of Investigation (CBI) probe into the insolvency of Amtek group.
Pointing out that only 457 out of 4,946 insolvency cases had got resolved in the past five years and Rs6 lakh crore of bank money was lost, Mr Khera said.
“No one but the CBI can probe this matter because it seems Ministry of Corporate Affairs (MCA) is ‘hand in glove', Serious Fraud Investigation Office (SFIO) is short staffed, and National Company Law Tribunal (NCLT) also seems to be a part of this ‘scam'," alleged the Congress party.
Anticipating the ruling party’s response, Mr Nirupam said, loans to defaulting corporate houses may have been given during the UPA period, but the massive write-offs under the insolvency law are happening in the past seven years under the BJP-led NDA government. He asked why there isn’t an effort to go for better recovery, when some promoters names have figured even in the Panama Papers.
Amtek Auto:
“The Amtech group of companies took a loan of Rs25,000 crore from Indian banks. And then it was put on sale for Rs4,100 crore. Where did the money of the banks go? This way our banks are being bankrupt, which is our money. There have been reports that Amtech conducted preferential transactions, transactions defrauding creditors. But the government is not taking any action against the promoters,” asked Mr Nirupam. He alleged that an explosive forensic audit by Ernst and Young's (EY), available in February 2018, was deliberately hidden from the bidders by the committee of creditors (CoC) and the resolution professional (RP).
The EY report said, "The Amtek group of companies took a loan of Rs25,000 crore from Indian banks. The company was eventually sold for Rs1,500 crore. Its promoters wrote off assets worth Rs7,500 crore, and Rs12,500 crore funds were siphoned off through shell companies," according to Mr Nirupam.
“Amtek group prima facie has carried out preferential transactions, transactions defrauding creditors, and it siphoned off more than 70% of its assets and funds illegally to 129 shell companies”, he added. When the matter reached the supreme court (SC), fresh bidding was ordered and the company was eventually sold for a mere Rs1,500 crore, but there was no action against the promoters, alleged the Congress leaders.
The Congress had questioned why the government 'took five years' after the liquidation proceedings of ABG Shipyard to lodge an FIR in connection with the alleged duping of 28 banks. The CBI booked ABG Shipyard Limited, its former chairman and managing director Rishi Kamlesh Agarwal, and others, for allegedly cheating a consortium of lenders led by the ICICI Bank only in February 2022.
The press conference video has since gone viral on social media.
While highlighting the case of Venugopal Dhoot’s Videocon, Mr Nirupam said that the company had a debt of Rs46,000 crore yet the company is getting sold for a paltry Rs3,000 crore soon as per information in public domain.
“Now a Marwari businessman like Venugopal Dhoot, a smart businessman, he drowns the company by taking Rs46,000 crore loans, it is so easy. Has anyone asked till today, where have these banks gone? The resolution has been announced under IBC and this company is already sold out to a new company, so the chapter is closed. But the government is delaying the malpractice or on the malpractice side.
“Anil Ambani has many different companies—Reliance Capital, Reliance Power, Reliance Infra, all together, they are sitting after borrowing Rs1.25 lakh crore from banks. Recently, Anil Ambani resigned from the director's post, so that no action is taken against him. So if you take action on time, you will catch the promoters, then you will also come to know where your bank money is getting siphoned, where is it diverted and how is it diverted, how is it being sent to shell companies,” explained Mr Nirupam.
Continuing further, he shared the story of Ruchi Soya—a public listed company that manufactures soya oil. There was a debt of Rs12,000 crores. Baba Ramdev took over the company for Rs4,500 crore. The government will predictably argue it was a legal route. But as per the deal terms, Baba Ramdev was to pay Rs1,000 crore up front while the rest of the Rs3,500 crore will be given to him as loan by banks. So, which are these banks? Ironically, these are the same banks which lost their money lent to Ruchi Soya when the company failed to repay it. So the same banks whose money was sunk, the same banks gave this money to Baba Ramdev to buy the company.
For a public listed company, as per SEBI rules, minimum 25% shareholding must rest with the public (i.e., small investors, retail investors), no matter what happens—whether the company remains or whether it is sold. But as soon as Baba took over the company, he froze the share price and gave zero value and informed everyone that you have nothing in the company. All the small investors exited.
Now two-three days ago, Ruchi Soya hit the capital market to raise Rs4,300 crore. The proceeds of the FPO (follow-on public offer) would are expected to be utilised to retire a term loan of Rs3,300 crore. Effectively Baba will also collect his Rs1,000 crore and this means Baba Ramdev has got Ruchi Soya company for free. This is how games are being played and public is being fooled by the government, Mr Nirupam explained.
The Congress claimed that these are just a few sample names and examples and many more such companies exist whose sale has similarly been gamed.


Ramesh Popat
8 months ago
there are such other cases also. alok text. adhunik etc.
govt should come clean on all these matters.
8 months ago
Agree investigation of massive write off be handed over to Congress Bureau Of Investigation (CBI)
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