Hotel Leela Venture's Rs 3,000-crore debt restructuring proposal has hit a wall with top lenders Indian Overseas Bank, Syndicate Bank and Bank of India fearing that they may lose out in the socialistic style of loan recovery under the corporate debt restructuring.
Lenders in possession of assets that have substantial value left in them as collateral are reluctant to participate in the CDR since it leads to pooling of less worthy collateral also into a single account, two people familiar with the development said. That robs some lenders the opportunity to recover dues. The Leela account is still not a bad loan in banks' books since interest was received till the fourth quarter of last fiscal, but the strain in the business and the debt pile requires restructuring of loans to avoid a default in the future. "We have not closed the case,'' said M Narendra, CMD of Indian Overseas Bank. "Banks have presented their views in the last meeting. We will meet and consider the proposal again,'' he said. Bankers Keen on Sale of Assets
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Lenders in possession of assets that have substantial value left in them as collateral are reluctant to participate in the CDR since it leads to pooling of less worthy collateral also into a single account, two people familiar with the development said. That robs some lenders the opportunity to recover dues. The Leela account is still not a bad loan in banks' books since interest was received till the fourth quarter of last fiscal, but the strain in the business and the debt pile requires restructuring of loans to avoid a default in the future. "We have not closed the case,'' said M Narendra, CMD of Indian Overseas Bank. "Banks have presented their views in the last meeting. We will meet and consider the proposal again,'' he said. Bankers Keen on Sale of Assets
Source
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