IBC registers a huge win in the Essar steel deal

Essar steel

The Insolvency and Bankruptcy Code (IBC) which was brought in by the government in the year 2016 as a bill to halt crony capitalism in the country has borne its first fruitful outcome with the sale of Essar Steel India Limited (ESIL) for its steel manufacturing activities in the country to Lakshmi Mittal led Arcelor-Mittal and Nippon steel JV who have signed an agreement to operate the plant in Hazira, Gujarat. This is one of the most concurrent decisions made under the IBC as the Committee of Creditors had already devised a sales plan to which objections were raised by the operational creditors of the company and the matter was pending in the supreme court since the process resolution plan was resolved and constituted to be forwarded to the interested parties in the game for a takeover through the bankruptcy code.

The total credit of the company was north of Rs 58,000 crore with credits both from the formal lending segment, and the operational creditors and Arcelor-Mittal won the bid at Rs 42,000 crore for the company. The operational creditors languish at the deal was that they were side-lined when deciding the final quantum of relay of the money that was to be received from the deal and thus had put a case in the supreme court to which the apex court replied that the decision of the CoC cannot be challenged and the resolution was to be carried on through the terms resolved by the committee and thus the case got its decision on the 15th of November 2019, after which Arcelor-Mittal along with their JV partners had put the money in an escrow account and had delayed the payment, but now it has started coming in, and the entire process will be over by Monday or Tuesday according to the banking lobby of creditors.