A secondary school in Noida, which had been classified as a Non-Performing Asset (NPA) since 2013 with a nationalized bank, sought our assistance through a referral. The situation was complex, with many parties, including Asset Reconstruction Companies (ARCs), offering unrealistic low-price solutions for a One-Time Settlement (OTS).

Key Challenges:

Conflict between the bank and the school owner: Both parties were unwilling to communicate and were prepared to pursue the matter in court.

Unrealistic settlement offers: The owner received multiple low-ball offers from ARCs and consultants, which did not align with the bank’s expectations.

Underutilized national asset: The school infrastructure was not properly maintained, as the owner lacked the funds for repairs, and the bank was solely focused on selling the asset to recover its money.

Legal complications related to land: There were numerous legal issues regarding the land on which the school was built.

Our Approach:
We approached the bank with a realistic proposal and advised the owner to cease discussions with any other parties regarding the NPA. While the bank was actively attempting to sell the asset through bids, they had not received any suitable offers. This gave us the opportunity to convince the bank to enter into negotiations with the owner for a reasonable settlement.

After several rounds of discussions between the bank and the owner, we were able to facilitate a dialogue. Meanwhile, we also approached the Reserve Bank of India (RBI) to create a framework for negotiated settlements, which was introduced in June 2023.

Resolution:
Following extensive negotiations, both the bank and the borrower agreed on a settlement amount under the OTS framework. The proposal then advanced to the bank’s board-level committee, where some directors pushed for a higher settlement price. At this critical juncture, we advised the borrower to accept the bank’s proposed rate to finalize the settlement.

As a result, the One-Time Settlement was successfully concluded. The bank resumed earning interest on the settled amount, and the school owner regained control of the property, allowing them to run the institution effectively. Today, the school operates successfully with renewed energy and motivation.