Shapoorji Pallonji Loan of INR 20,000 Crore settled advised by SBI Legal Counsel L&L Partners one time restructuring
The Firm’s Banking and Finance Team recently acted as the lenders’ legal counsel to State Bank of India (“SBI”), the lead bank along with multiple lenders, in the one-time restructuring of the outstanding loans of around INR 20,000 crore of Shapoorji Pallonji and Company Private Limited (“SPCPL” or the “Borrower”) under the auspices of the Resolution Framework for COVID-19-related Stress dated August 6, 2020 (“August 6th Circular”) issued by the Reserve Bank of India (“RBI”). SPCPL, the holding company of the Shapoorji Pallonji Group, is a renowned Indian conglomerate company, with operations in construction, real estate, engineering et al. across the globe
Significance of the deal
The August 6th Circular was issued by the RBI in an effort to ease the financial stress that was caused by the advent of the Covid-19 pandemic and to facilitate the revival of real estate sectors. This circular, catering specifically to certain categories of borrowers affected by the business disruption caused by Covid-19, allows for the creation and implementation of resolution plans in the nature of restructuring while permitting the borrower accounts to retain their status as “standard” in the interim. The August 6th Circular acts as a carve out from the RBI’s Prudential Framework for Resolution of Stressed Assets dated June 7, 2019 (“June 7 Circular”), which allows for restructuring of stressed companies but requires the downgrade of the borrower accounts to a “non-performing asset” until the satisfactory performance threshold under the said circular is met.
This transaction is one of the first and the largest one-time restructuring transactions to have taken place under the recent August 6th Circular. It involved the restructuring of various debt exposures/ conversion of debt instruments/ coverage of security for the exposures and comprised of over 22 banks and financial institutions (“Lenders”). The collateral structure of the restructuring was extremely complex and involved around 18 companies of the Shapoorji Pallonji group, providing various credit comforts and supports to hold up the features of the restructuring which had ramifications throughout the groups businesses. The Firm’s counsels were involved in advising and coordinating with all 22 Lenders, along with being involved in the negotiations with the Lenders and the Borrower, in drafting, reviewing, and finalising the documentation, and providing advice and assistance in perfection of security interests thereafter. The transaction took place under very tight timelines to meet stringent regulatory sunset periods.
The Team
The core transaction team comprised of associates Aryadevi, Devashree Limaye and Priyambada Datta and was led by Partner Satadru Goswami. Partner Vaibhav Suri and Senior Associate Urjita Chitnis advised the team on the real estate aspects of the deal. Associate Pavishka Mittal provided valuable assistance and guidance to the Team in conducting the closing process and overseeing the execution of transaction documents.