Raising doubts over the early resolution of Essar Steel
insolvency case, State Bank of India
has put on sale its loans to Essar SteelNSE 0.00 %
worth Rs 15,431 crore. A notice on its auction website says the sale is open for asset reconstruction companies, non-banking finance companies, banks and financial institutions.
Early this month, the National Company Law Appellate Tribunal (NCLAT) ordered the Ahmedabad Company Law Tribunal (NCLT) to resolve Essar Steel insolvency case “expiditiously” paving the way for banks’ bad loan recovery in one of the large loan default cases in the country that battles about $260 billion soured credit.
The committee of creditors to Essar Steel, led by the State Bank of India, Wednesday filed an application at NCLAT, New Delhi seeking the disposal of the insolvency case within the next three weeks, according to an ET report.
The case has been running for about 500 days, while the maximum stipulated time for the resolution of any case under the Insolvency and Bankruptcy Code is 270 days.
On October 25, more than 92% of the creditors at Essar Steel voted in favour of a proposal by ArcelorMittal, which would be the new owner of the debt-laden steelmaker that had failed to repay thousands of crores to its creditors.
ArcelorMittal’s resolution plan entails an upfront payment of Rs 42,000 crore to lenders and an additional Rs 8,000 crore toward capital expenditure. Separately, a group of operational creditors and Essar Steel shareholders have challenged the CoC and the resolution professional’s decision to accept the ArcelorMittal resolution plan.
About 30 vendors, who had supplied goods and services to Essar Steel, came together to petition the NCLT’s Ahmedabad chapter, seeking their dues.
The minimum reserve price for the loans has been set at Rs 9,587 crore. The notice says that as per the approved resolution plan of ArcelorMittal subsidiary ArcelorMittal India Private Limited, minimum recovery to SBINSE 0.50 % is Rs. 11313.42 crore.
Reserve price of Rs 9587.64 cr is on the basis of NPV of minimum recovery discounted at 18% with a time factor of one year. The notice says that in case, the amount is realized prior to one year, the buyer must offer a claw back option based on the time factor