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NCLT to pronounce Essar Steel’s insolvency order on Wednesday

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Source: The Economic Times
Thursday, August 03, 2017

 AHMEDABAD: National Company Law Tribunal (NCLT), Ahmedabad will pronounce its order on Wednesday on petitions filed by State Bank of India (SBI) and Standard Chartered Bank (SCB) for initiating of insolvency proceeding under Insolvency & Bankruptcy Code (IBC) against the steel major, Essar Steel. 


After losing an intense legal battle at Gujarat High Court, Essar Steel is again back at NCLT, where SBI and SCB is fighting to ensure admission of their insolvency application against Essar Steel and simultaneously appointment of their interim resolution professional (IRP) under Insolvency & Bankruptcy Code, 2016. 

Earlier, Essar Steel had petitioned the Gujarat High Court against its inclusion in the list of 12 defaulters to be tried at NCLT by the Reserve Bank of India (RBI) June's press release, saying that its restructuring proposal was at an advanced stage and that it's financial and operational improvements since March 2016 have not been taken into account by RBI. 

On 17th July, Gujarat HC turned down Essar Steel's appeal, observing that the regulator and banks are empowered to do so, giving a boost to the government's efforts to clean up the country's bad-loan mess. 

Last week, and SCB fought and nail, to convince the NCLT that its insolvency application should be accepted against Essar Steel. In its application SCB has suggested appointment of Dinkar Venkatasubramanian, partner, transaction advisory services, at consulting firm Ernst & Young as IRP. While SBI's application suggested Satish Kumar Gupta of Alvarez and Marsal India to be appointed as IRP. 

As per the industry observers, NCLT's order would have a national implication on most of the other insolvency cases filed in various NCLT across the country. Even banking and financial sector would keep a close watch on NCLT's Wednesday order. 
 
Essar Steel owes more than Rs 45,000 crore to lenders, of which Rs 31,671 crore had already been declared as non-performing as of March 31, 2016. SBI led consortium of 22 creditors accounts to 93 per cent of this amount. Essar Steel owes $450.67 million to SCB in debt. 


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