SEBI has, in consultation with stakeholders, prescribed the process to be followed by Debenture Trustees (DT) in case of default by issuers of listed debt securities, which is being implemented with immediate effect. This process includes seeking consent from the investors for enforcement of security and/or entering into an Inter-Creditor Agreement (ICA).
While “Default” has been defined under the SEBI LODR Regulations to mean the non-payment of interest or principal amount in full on the pre-agreed date, an ‘event of default’ will be reckoned at the ISIN level, even though it might have been issued under multiple Information Memorandums (IMs).
The resolution plan in the ICA may involve restructuring including roll-over of debt securities requiring the consent of the investors. The process to be followed for seeking consent for enforcement of security and/or entering into an ICA is as under :
For this purpose, consent of the majority of investors shall mean the approval of not less than 75% of the investors by value of the outstanding debt and 60% of the investors by number at the ISIN level.
To refer to the SEBI circular dated 13 October 2020, click here.
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