Decision process Decisions in the CDR system are taken on basis of super majority where 75% of lenders by value and 60% of lenders by number have to agree. The mechanism is based on Inter Creditor Agreement signed by all member Banks and Debtor Creditor Agreement signed by the Borrower.
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Decisions in the CDR system are taken on basis of
super majority where 75% of lenders by value and
60% of lenders by number have to agree.
The mechanism is based on Inter Creditor Agreement signed by all member Banks and Debtor Creditor Agreement signed by the Borrower.
Lenders & borrowers not to initiate or proceed
with civil suit
Not to approach any authority for any relief
Directors not to resign.
Documents stand extended.
Status quo ante for asset classification if package
approved & implemented within 120 Days.
Outline of the Process
Submission of Flash Report – scrutiny to ensure
benchmarks and admission of the case by Empowered
Appointment of Monitoring Institution (MI) & members
of Monitoring Committee (MC)
Conduct of Joint Lenders Meet (JLM) for finalization of
Approval of Final Restructuring Package by EG.
Execution of Master Restructuring Agreement and
Trust & Retention Agreement.
Initial scrutiny for Flash Report max 30 days
Approval of Flash : Next EG Meeting
Approval of Final Package 60/ 90 days
Issue of LOA: After confirmation of minutes
Approval by individual lenders : 45 days Package
Implementation by all : 120 days
Components of Restructured package
Within overall regulatory guidelines applicable, each package is tailor made to suit the corporate needs. Generally the package may involve concessions in rate of interest, modification in repayment schedule, carving out irregularity in Working Capital into WCTL, Funding of Interest, conversion of debt to equity or other debt instruments.
Additional Finance, if any, to be provided by CDR lenders or all lenders on pro rata basis.
Preferential claim with respect to cash flows in respect of additional exposures.
Waterfall Mechanism is embedded in the MRA and TRA
Asset classification benefits for additional exposures as per extant regulatory guidelines.
Sharing additional finance compulsory only in Category I cases.
Requirements from Borrower
Enhanced security by way of Guarantee of promoter, Pledge of shares.
Promoters’ contribution 20% of lenders’ sacrifice or 2% of restructured debt, whichever is higher.
Restrictions on expansion, capex, dividends etc.
Key Financial Benchmarks
DSCR - 1.25:1
Return on Capital Employed – 5 year G sec + 2%
Gap between IRR and cost of capital – at least 1%
Loan Life Ratio – 1.40
Break-even analysis – in line with industry
Industry indicators – EBIDTA, price realization,etc
Exit from CDR
Exit from CDR is triggered on
Completion of restructuring period
Financial performance of the borrower is 25% more
than EBIDTA projections for 2 consecutive years.
Upon Exit, Recompense has to be paid by the Corporate for the sacrifices made by the lenders, as per CDR guidelines.