The ongoing resolution to the stressed Essar Steel debt took an interesting turn with State Bank of India on Monday moving the Supreme Court against the National Company Law and Appellate Tribunal (NCLAT) recent order directing the committee of creditors to consider more payment to Standard Chartered Bank from the ₹42,000-crore winning bid of ArcelorMittal.
Incidentally, SBI decision to move the apex court comes even as NCLAT is slated to hear the outcome of committee of creditors (CoC) meeting on April 9. The CoC meeting was held late last week to consider NCLAT direction to consider more payment for operational creditors and Standard Chartered Bank.
Though CoC agreed to set aside ₹1,000 crore more to the operational creditors, they refused to consider ₹3,487 crore disbursed by Standard Chartered as a secured credit.
Moreover, Standard Chartered had extended the loan to Essar Steel Offshore, a subsidiary of Essar Steel. The promoters have pledged the shares of Essar Steel to claim the loan and now the foreign bank wants to consider it as secured on the basis of share pledge, said a banker.
Earlier, Standard Chartered had informed NCLAT that it will get only 1.7 per cent of its dues or ₹60 crore if the approved ArcelorMittal plan is executed. On the other hand, it said other lenders will get 92 per cent of their debt.
Last August, Essar Steel’s lenders led by SBI, ICICI Bank, IDBI Bank, Edelweiss ARC, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India and Punjab National Bank raised objection to re-classification of Standard Chartered loan from unsecured to secured.
Turning down Standard Chartered claim, a senior banker said the foreign bank had executed the guarantee extended by Essar Steel promoters without getting a no objection certificate from Indian lenders who had the first right over the shares.
Meanwhile, operational creditors who had made a claim of ₹4,700 crore will now receive ₹1,200 crore against ₹200 crore earmarked earlier as per the ArcelorMittal resolution plan. The keenly-watched Essar Steel debt resolution process under the Insolvency and Bankruptcy Code has undergone many twist and turn ever since the case was accepted at NCLT in July, 2017 to ₹54,000 crore defaulted by the company.