Many companies have gone in Insolvency under IBC last year, having saw change of Promoters, thus saving crores of rupees of the lenders. Prominent amongst them were Essar Steel, Bhushan Steel, Alok Industries, Bhushan Power, Monnet Ispat and Ruchi Soya. But retail equity shareholders of these companies were not very happy. Reason that over 95% equity got written off. Also, an inordinate delay is seen happened in resolution under IBC at NCLT.
Realising this, RBI came out on 7th June, 2019, with Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019, where stressed companies are resolved out of IBC. Post enactment of these Regulations, almost none of the large accounts are referred to IBC. Resolution of CG Power and Eveready Industries, under these regulation infact has cheered the equity shareholders, as also, enhancing wealth of all the stakeholders. Hence, both these companies were given in our Multibagger sections in the Member Zone and have risen 150% and 200% respectively since our recommendation.
Hence, investors have started hunting for such prospective candidates for debt resolution. Few of such companies, not yet admitted to Insolvency under IBC are Jain Irrigation, McLeod Russel, Jayaswal Neco. Do these companies have the potential to reward equity holders as well? Refer to our Member Zone to find out which of these companies are worth exploring for investment.