1 min read.Updated: 18 Nov 2019, 12:07 PM ISTIshita Guha
Kumar spoke to business news channel CNBC TV18 after the Supreme Court on Friday gave its verdict in favour of committee of creditors decision
With its judgment, the apex court also ended an over two-year long legal battle to acquire Essar Steel.
State Bank of India Chairman Rajnish Kumar on Monday said recoveries from resolution of the Essar Steel insolvency case will add to the lender’s profit in this quarter ending December.
Kumar spoke to business news channel CNBC TV18 after the Supreme Court on Friday gave its verdict in favour of committee of creditors’ (CoC) decision, paving the way for ArcelorMittal’s entry into India. With its judgment, the apex court also ended an over two-year long legal battle to acquire Essar Steel.
“We have provided 100% (for Essar Steel). Whatever recovery comes from Essar Steel, it will go to the bank’s P&L (profit and loss) account," Kumar said, adding that all recoveries where the bank has made 100% provisions will straight away go into the lender’s profit and loss books.
Essar Steel owed its financial creditors ₹49,473 crore, of which State Bank alone had an exposure of ₹13,226 crore to the steel company. Total outstanding, including claims of financial as well as operational creditors, stood at ₹54,565 in India’s one of the biggest insolvency cases.
The Supreme Court on Friday said the National Company Law Appellate Tribunal (NCLAT) should not interfere with the decisions of the CoC in the Essar Steel insolvency case. In doing so, the apex court gave more weight to the financial creditors and overruled NCLAT’s July 5 judgment that operational creditors should be treated on a par with financial creditors for distribution of funds.
The CoC had filed petitions against NCLAT’s judgment, challenging that they should recover more than operational creditors in the bankruptcy resolution process.
The Ahmedabad bench of National Company Law Tribunal had in March 2019 approved global steel-giant ArcelorMittal’s bid for Essar Steel. ArcelorMittal had offered an upfront cash payment of about ₹42,000 crore to the financial creditors and capital infusion of ₹8,000 in the next few years.
ArcelorMittal’s offer did not cover operational creditors to Essar Steel, which is promoted by the Ruias. The case was admitted to NCLT in August 2017 for insolvency proceedings after it was identified by the Reserve Bank of India in the first list of 12 big loan defaulters.