Insolvency and Bankruptcy Code: Bankruptcy court admits lenders insolvency plea against Sterling Biotech – The Economic Times

The bankruptcy court has admitted the insolvency plea against Sterling BiotechNSE -3.33 % filed by Andhra Bank – a move by banks to recover their dues amidst probe by investigative agencies on allegation of misuse of bank loans.

Senior officials from the banking circle said that Andhra Bank, which is the led bank has called a meeting of lenders on Tuesday to discuss the loan account and ways to resolve it. Banks have given close to Rs 5000 crore to the Gujarat based pharmaceutical company which is now classified as a non performing loan.

“Lenders may have to write off majority of the loan since there is little scope of bidders showing interest in a company that facing probe from investigative agencies,” said a senior bank official who did not want to be named. Other lenders include UCO BankNSE 0.74 %, State Bank of India, Allahabad BankNSE -1.19 % and Bank of India

In October last year, Central Bureau of Investigation had filed First Information Report (FIR) against the promoters and directors of the company on allegations of defrauding lenders by availing loans for benami companies. Earlier this month, Enforcement Directorate has attached movable and immovable properties of Sterling Biotech on allegation of money laundering and loan fraud. The main accused Sandesara brothers have fled the country.

It is alleged by CBI that Sandesara brothers obtained credit facilities of Rs 5383 crore from various banks on the basis of fraudulent documents and later failed to repay the loan. According to reports, the Enforcement Director has attached 4,000 acres of land, plant machinery, around 200 bank accounts of various companies and accounts of promoters.

CBI in its FIR alleged that the directors of the company connived with the in-house chartered accountant and falsified material records of the company, such as production, turnover and investments in capital assets. It also said that this was allegedly done using various India—based entities and those situated abroad.

via Insolvency and Bankruptcy Code: Bankruptcy court admits lenders insolvency plea against Sterling Biotech – The Economic Times

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