State Bank of India (SBI) and Standard Chartered Bank (SCB) achieved significant success on Wednesday when the National Company Law Tribunal (NCLT) admitted their petition to initiate insolvency proceedings against the company that owes around Rs 37,000 crore to banks.
After the Ahmedabad Bench of the NCLT admitted the lenders' petition under the Insolvency and Bankruptcy Code, 2016, two professionals — Satish Kumar Gupta from Alvarez and Marsal — were appointed as Interim Resolution Professional (IRP) under Section 13 of the Code, according to a report by barandbench.com on Wednesday.
Also read: List of India's top 12 defaulters who owe a mind-boggling amount to banks
Essar Steel is one of the top 12 defaulters whose collectively owe about 25 percent of the overall gross NPAs of about Rs 8 lakh crore (Rs 7.7 lakh crore, according to some estimates) to banks.
The management control of Essar Steel, in accordance with the provisions of the Code, now passes to the two IRPs and the Essar board stands suspended for 180 days. Simultaneously, it paves the way for the formation of a committee of creditors that will take decisions in accordance with Section 28 of the Code, the website reported.
Essar Steel had unsuccessfully tried to stall insolvency proceedings last month but the Gujarat High Court dismissed the company's petition that challenged the Reserve Bank of India's directive to banks for initiating insolvency proceedings to recover their dues.
Other defaulters include Lanco Infratech Limited, Bhushan Steel, ABG Shipyard, Alok Industries, Electrosteel Steels, Jyoti Structures, Bhushan Power, Jaypee Infratech, Era Infra Engg, Monnet Ispat, and Amtek Auto, according to media reports.
Essar Steel had argued in its petition before the Gujarat High Court that with annual revenues of around Rs 20,000 crore, it stood on a different pedestal when compared to other defaulters who had failed to repay their dues and claimed that it had paid Rs 3,467 crore to banks between April 2016 and June 2017.
Essar Steel has a production capacity of 10 million tonnes per annum and is not a listed entity.
