Transstroy India heads for insolvency, NCLT nod for proceedings

The National Company Law Tribunal, Hyderabad Bench has admitted a petition for insolvency against Transstroy (India) Limited initiated by Canara Bank, declared a moratorium and appointed insolvency resolution professional. While declaring moratorium with effect from October 10, till the completion of the Corporate Insolvency Resolution Process or until the Bench approves the Resolution Plan, or takes up liquidation of the corporate debtor, the Judicial Member Ratakonda Murali, appointed Govindrajulu Venkata Narasimha Rao, as interim resolution professional to carry out the functions under the Insolvency and Bankruptcy Code, 2016. The petitioner bank stated that it had sanctioned Rs 125 crore under Fund base working capital limits and Rs 600 crore under non-fun based working capital limits, which include bank guarantees of Rs 500 crore and letter of credits of Rs 100 crore, aggregating Rs 725 crore. It conteded that Transstroy defaulted its payments to the bank and that the petition was filed seeking direction of the Tribunal to initiate CIRP against Transstoy and find a resolution plan. The company is engaged in execution of irrigation and road projects and completed several BOT road projects and the fifth one was under construction. The company is also executing a contract of Rs 5788 crore in the mega Indira Sagar Polavaram Project in Andhra Pradesh through a joint venture firm. The Petitioner bank also stated that two of the properties of Transstroy in Hyderabad have been acquired by Special deputy Collector through land acquisition for metro projects and a compensation of Rs 150 crore was pending. The debtor has availed term loans and working capital limits from 14 nationalised bank and under multiple banking agreements to the tune of Rs 2687 crore. Transstroy had also entered into a memorandum with China CNE Limited of Beijing for an equity cum debt deal of $ 400 million. The debtor company opposed the petition for insolvency stating that the claim put forward was not tenable. Observing that the petitioner bank contended that it had a total claim of Rs 686 crore, plus interest, and that the debtor had defaulted, the NCLT member pronounced that it was case to take up insolvency proceedings.