Essar Steel gets more time for insolvency

Essar Steel gets more time for insolvency
19/07/2017 , by , in ALLIED

Appearing before the Ahmedabad bench of the National Company Law Tribunal (NCLT) , Essar Steel sought more time to file its objections to the insolvency petition filed by its lenders State Bank of India and Standard Chartered Bank (SCB).

The single-judge Bench, chaired by Justice Bikki Raveendra Babu, allowed the company time till July 22 to file its objections, and placed the next hearing on the matter on July 24.

Outstanding dues

The lenders, SBI and SCB, had independently filed applications before the Ahmedabad branch of NCLT for initiating insolvency proceedings against Essar, after the company’s outstanding dues hovered over ₹34,000 crore. The company has its 6.8 MTPA steel plant at Hazira, Gujarat.

In its request, Essar Steel counsel pleaded before the court for extra time, while the counsels representing the applicants — SBI and SCB — objected to Essar Steel’s plea for extension.

The applicants claimed that the ‘defaulter company’ had had enough time for preparing objections over the past fortnight, when the Gujarat High Court was hearing its petition to quash the insolvency proceedings. The High Court had on Monday dismissed Essar Steel’s plea.

If the NCLT admits the lenders’ plea on July 24, it will lead to immediate dissolution of the Board of Directors of Essar Steel, followed by the appointment of an interim resolution professional (IRP), who will have 180 days to come out with a resolution plan for the company to repay the loan.

According to the Insolvency and Bankruptcy Code (IBC) 2016, the timeline can be further extended by 90 days. The plan has to get an approval from the committee of the lenders by 75 per cent majority before filing it with the NCLT.

In case no workable solution is reached within the maximum stipulated period of 270 days, a liquidator will be appointed to initiate the liquidation process.

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