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The Committee of Creditors (CoC) to Asian Colour Coated Ispat has voted in favour of the ₹1,550-crore resolution plan submitted by JSW Steel on Friday.
The plan for revival of the insolvent Asian Colour Coated plant includes an upfront payment of ₹1,525 crore to secured creditors and ₹25 crore to operational creditors.
Though there were resistances from a few creditors, the plan was voted in favour by 80 per cent of the CoC, said banking sources involved in the resolution process.
The company, with one million tonnes of value-added products, was referred to insolvency proceedings by State Bank of India last year. JSW Steel was the only bidder for the stressed asset.
When contacted, JSW Steel refused to comment on the development.
The CoC will issue the letter of intent to JSW Steel and once accepted by the company the resolution plan will be submitted to National Company Law Tribunal (NCLT) for the final approval.
Vardaman Industries
Even after CoC approval, most of the insolvency cases are stuck in NCLT due to objections raised by aggrieved operational creditors who hardly recover any of their dues in the entire resolution process.
JSW Steel had emerged as the winning bidder for another insolvent value-added steel product producer Vardaman Industries last December and the company had accepted the letter of intent issued by CoC.
However, NCLT has not given its final approval in the case.
The total admitted debt of Vardaman was about ₹6,500 crore and JSW Steel had offered to pay ₹1,550 crore, almost all of which will go to financial creditors.
SBI, Bank of Baroda and IDBI Bank are the main lenders to the company.
Similarly, JSW Steel had accepted the letter of intent issued by Bhushan Power and Steel in February but is yet to get NCLT’s approval.
It was to pay ₹19,700 crore for the stressed asset against a default of ₹47,000 crore to financial creditors and ₹734 crore to operational creditors to Bhushan Power.
The prolonged delay in takeover of the stressed asset even after CoC approval has been raised by bidders concerned on deteriorating quality of the asset with no fresh capital flowing in, said an analyst.
Last year, a JSW Steel-led consortium had acquired majority stake in Monnet Ispat and Energy for ₹2,875 crore under the Insolvency and Bankruptcy Code.
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