NEW DELHI: The National Company Law Tribunal (NCLT) Kolkata Bench on Tuesday approved Vedanta Limited’s resolution plan for the insolvent Electrosteel Steels, making it the first company among the 12 large corporate defaulters — also known as the ‘Dirty Dozen’ — to be resolved under the Insolvency and Bankruptcy Code.
The Division Bench comprising Justice Jinan K R and Justice Madan Balachandra Gosavi, in its order, said that “the approved (by Committee of Creditors) resolution plan shall come into force with immediate effect.”
The Anil Agarwal-led Vedanta informed the stock exchanges that it has been declared the “successful resolution applicant” under the insolvency process and has received the Letter of Intent. The resolution plan involved about `5,300 crore cash payout, but has different components to it.
Vedanta said that pursuant to the resolution plan, a wholly-owned subsidiary of the company will subscribe to the share capital of Electrosteel for an aggregate amount of `1,805 crore and provide additional funds with an aggregate of Rs 3,515 crore by way of debt. Electrosteel owes lenders more than Rs 13,000 crore, of which about Rs 5,000 crore is to the State Bank of India alone.
Upon implementation of the resolution plan, Vendanta will hold approximately 90 per cent of the paid-up share capital of Electrosteel, while the remaining 10 per cent will be held by the Electrosteel’s existing shareholders and financial creditors, who would receive shares in exchange of the debt owed to them.
Vedanta is now awaiting the CCI (Competition Commission of India) approval, for which they had applied about 10 days ago. The approval should be through quickly in the next two to three weeks. Tata Steel and Renaissance Steel were the two other bidders for Electrosteel.