NEW DELHI: State-run lender State Bank of India (SBI) has moved the Supreme Court against the National Company Law Appellate Tribunal (NCLAT) order suggesting that the committee of creditors (CoC) consider a higher payout for Standard Chartered Bank in the Essar Steel insolvency case—a move that is set to further delay resolution of the 21-month-old insolvency case.
Earlier this week, the appellate tribunal had asked lenders to re-look at the apportioning of dues to Standard Chartered and operational creditors, and consider the 85:15 formula suggested by NCLT Ahmedabad for distribution of Rs 42,000 crore offered by ArcelorMittal. On Saturday, however, the CoC unanimously voted against a higher payout to Standard Chartered and sought to curtail payment to the private lender at Rs 60.71 crore as originally envisaged.
Arguing that the insolvent Essar Steel was neither a direct corporate debtor of Standard Chartered nor did the lender hold the first charge of its assets, the CoC said it would be unfair if it was not paid in accordance with the security it had against its admitted claims of Rs 3,487 crore.
Apart from SBI, which has the largest exposure in Essar Steel, the other creditors, including IDBI Bank, ICICI Bank and Edelweiss ARC—who have formed a core committee to take a decision on behalf of lenders—don’t want the plan changed as it will eat into their payouts, said people aware of the development, adding they could file a caveat in the Supreme Court if the NCLAT did not rework its proposal.
As far as paying more to operational creditors is considered, the CoC agreed to give them an additional Rs 1,000 crore, over and above the Rs 196 crore allocated in the original resolution plan approved by the CoC in October last year. So far, operational creditors were slated to recover less than five per cent, or Rs 214 crore, against their outstanding Rs 4,976 crore.
That amount will now increase to around Rs 1,214 crore. Financial creditors led by SBI, on the other hand, will get 92 per cent of their dues, which comes to around Rs 41,987 crore of a total Rs 49,395 crore, as per the proposal submitted by ArcelorMittal. The NCLAT will hear the matter furthe on April 9. But whatever the decision of the tribunal, bankers expect Standard Chartered to oppose taking the matter to the SC.
Recovery to improve
So far, operational creditors were slated to recover less than five per cent, or I214 crore, against their outstanding I4,976 crore. That amount will now increase to around I1,214 crore.
Financial creditors led by SBI, on the other hand, will get 92 per cent of their dues, which comes to around I41,987 crore of a total I49,395 crore, as per the proposal submitted by ArcelorMittal. The NCLAT will further hear the matter on April 9.