IDBI Trusteeship filed the case on behalf of DB International (Asia), a subsidiary of Deutsche Bank, seeking court intervention to obtain Rs 293 crore under the Trust Account and Withholding Agreement (TRA) from IDBI Bank. Bondholders claim that, being priority lenders, they are entitled to the money in the banks.
Apart from this, the bondholders are also asking for interim measures in the form of the appointment of a receiver for the TRA. The amount is currently in an account with the IDBI bank.
These particular series of bonds offered rates of up to 13.99% and will mature on May 12, 2021. These were sold in the first half of the decade. IDBI administrators could not be contacted immediately.
“This is a dispute between the main lenders and the priority lenders and the company will not intervene in this matter,” said a spokesperson for GVK.
“The administrator has filed a petition acting on behalf of the bondholders. Deutsche Bank, Singapore insisted because they did not receive interest,” said a person with direct knowledge of the matter.
On June 26, Judge BP Colabawalla, after hearing from both sides, ordered the lenders to maintain a balance of Rs 293 crore in the bank account linked to the TRA agreement until further notice. The court also observed that it had not considered the merits at this point and ordered the bank to file a response.
Senior Legal Advisers Janak Dwarkadas and Harish Salve represent the offshore lenders in this matter, while IDBI Bank is represented by Senior Legal Advisers Birendra Saraf and Nishit Dhruva, Managing Partner of MDP & Partners.
“Defendant # 1 (IDBI Bank) has deliberately withheld payments in flagrant violation of its contractual and fiduciary obligations and Plaintiff (IDBI Trusteeship) sincerely believes that if said account continues to remain under the control of Defendant # 1, then he can illegally debit said account and withhold the funds, ”the bondholders said in their petition.
During 2017, Deutsche Bank’s local subsidiary extended a senior rupee term loan facility and also issued non-convertible debentures for which DBIA had subscribed to senior bonds with a face value of 307 rupees. .
The bondholders, arguing that the existing creditors had signed an inter-creditors agreement (ICA) on July 30, 2017, with the bondholders (DBIA), the defendant n ° 1 (IDBI Bank) and the plaintiff (IDBI Trusteeship) in its capacity as guarantor fiduciary, agreeing to the priority facility and categorically recognizing that the bondholder has payment and security priority over all existing creditors.
In December 2019, the country’s third-largest private sector lender, Axis Bank, approached the National Company Law Tribunal (NCLT) in Hyderabad against GVK Power after failing to repay its dues.
Subsequently, the offshore lenders sent a bond acceleration notice in January and demanded that all outstanding amounts credited to TRA be immediately applied to the repayment of amounts owed on senior bonds.
The offshore lenders claimed to have sent several reminders between January and May to the IDBI bank to release the amount in the TRA account, but so far the bank has not responded and so they have approached the Bombay High Court for get the money back.