IRPs initiate fresh forensic audit of Essar Steel, Bhushan Steel accounts
Insolvency professionals of Essar Steel Ltd and Bhushan Steel Ltd have initiated fresh forensic audits of these companies’ accounts following the recent changes in rules introduced by the bankruptcy regulator, according to five people familiar with the matter.
The purpose of the audit is to ascertain if there was any preferential treatment given by promoters to related parties or any non-related parties during the two years preceding the commencement of insolvency proceedings, and if there were any undervalued or fraudulent or extortionate credit transactions. These audits will also check for any related-party transactions within group companies. In both cases, promoters have decided to submit their resolution plans to buy back their companies.
Alvarez & Marsal’s Satish Kumar Gupta, is the interim resolution professional (IRP) for Essar Steel while Deloitte Touche Tohmatsu India LLP’s Vijaykumar V. Iyer, is in charge of operations at Bhushan Steel. This is the second instance of a forensic audit being ordered on the books of accounts of both these companies.
Lenders led by State Bank of India (SBI) had also called for a forensic audit in Essar Steel as part of the resolution process but the audit never took off. In the case of Bhushan Steel, lenders had asked Deloitte to complete the forensic audit three years ago.