SBI files insolvency petition against Simplex

16 Mar 2023 , 08:09 AM

After unsuccessful attempts to restructure its loans, State Bank of India (SBI) has filed an insolvency suit with the National Company Law Tribunal (NCLT) against Kolkata-based engineering, procurement, and construction (EPC) firm Simplex Infrastructures to recover its debts.

One of the largest accounts to be brought before bankruptcy courts recently, the company owes creditors led by Punjab National Bank (PNB) a total of Rs 9,600 crore. The petition will probably be heard by the NCLT later this month.

With the consolidation of debt from the former United Bank of India (UBI) and Oriental Bank of Commerce (OBC), which PNB acquired in 2020, PNB is the major lender with outstanding dues of Rs1,600 crore. With around Rs1,500 crore in unpaid debt, SBI is the second-largest creditor, followed by Indian Bank with Rs1,400 crore.

‘This company, which has been ill for more than three years, has more than twenty lenders listed as creditors. Ideally, the petition will be accepted shortly so that all creditors can pursue a recovery method ‘a source familiar with the company’s position told ET.

Simplex, a company founded in 1924, has constructed some iconic bridges and is active in urban transportation initiatives. However, the company’s cash became constrained as a result of missed government payments and the cancellation of sizable contracts, and banks in 2019 classified these loans as non-performing assets (NPAs).

According to documents obtained by ET, the case was originally scheduled for a hearing on February 15 but was later moved to March 17. On the company’s website, it is stated that it has finished more than 2,600 projects of all sizes and building kinds around the nation.

According to company financial data, Simplex has been losing money for more than a year as a result of declining revenue and rising costs. The company posted a loss of Rs137 crore in its most recent earnings for the quarter that ended in December 2022.

Bankers are not very optimistic about the account’s chances of being recovered. ‘These EPC companies frequently have numerous pending government receivables, many of which have counterclaims. Recovery efforts are therefore particularly challenging because these organizations have so little monetizable assets ‘a second individual familiar with the company’s status told ET.

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