The Firm advised Stressed Asset Stabilisation Fund (“SASF”), a special purpose vehicle constituted as a trust by the Government of India (“Government”) pursuant to a trust deed dated September 24, 2004 (“Trust Deed”). The said trust was settled for the purpose of acquiring, administering, and recovering a pool of stressed loan assets that were transferred from Industrial Bank of India, a statutory corporation established under the Industrial Development Bank of India Act, 1964 in 2004 vide a transfer deed.
The trust was envisaged to be dissolved inter alia upon the expiry of 20 (twenty) years or upon fulfilment of the purpose of the trust. Pursuant to the resolution of the loan assets over several years, including by way of assignment of an identified asset portfolio to Omkara Assets Reconstruction Private Limited in the recent past, SASF was due to be dissolved. In this regard, vide a letter dated March 20, 2026 (“Government Mandate”), the Government approved the final closure of SASF to be completed by March 31, 2026 (“Closure Date”) and directed the transfer of all balance assets (comprising of a loan asset with total outstanding of approximately Rs. 3,641 crores as on a specified date and a minority shareholding in a borrower company (“Identified Assets”)), to IDBI Bank Limited for an identified purchase consideration. Accordingly, IDBI Bank Limited and SASF executed an Omnibus Transfer Agreement on March 27, 2026, to give effect to the transfer of the Identified Assets from SASF to IDBI Bank Limited for the purpose of ensuring closure of the SASF trust.
This transaction marks the culmination of over two decades of stressed asset resolution by SASF which was the first bad bank in the Indian financial ecosystem entrusted with the responsibility of resolution / recovery of a large pool of stressed loan assets. The Firm advised SASF on the transfer of the residual assets (being the Identified Assets) to IDBI and the subsequent closure of SASF trust.
The transaction entailed the transfer of the Identified Assets, comprising of a loan account and a minority shareholding in a borrower company, from SASF to IDBI Bank Limited under a single document. Given that the Government Mandate was issued on March 20, 2026, and the closure date was March 31, 2026, the transaction was executed under significant time constraints and necessitated careful structuring of the Omnibus Transfer Agreement given the distinct nature of the Identified Assets and dealing with the peculiar situation of imminent closure of the SASF trust. The Firm also advised SASF in relation to the various legal and procedural formalities pertaining to the effective closure of the SASF trust.
The team was led by Abhishek Mukherjee, Partner; with support from Parnika Jain, Senior Associate; and Samarjit Singh, Associate.
