Resolution, at last: on Essar Steel case

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Resolution, at last: on Essar Steel case

Essar Steel case has clarified many aspects of the Insolvency and Bankruptcy Code process
The National Company Law Tribunal’s(कानून न्यायाधिकरण) approval of ArcelorMittal’s bid(बोली) for the insolvent(दिवालिया/शोधाक्षम) Essar Steel Ltd. is significant(महत्वपूर्ण ) for several(कई ) reasons(कारणों ). First, the ₹42,000-crore bid will be the largest single recovery of debt(वसूली) under the fledgling(अनुभवहीन मनुष्य) Insolvency and Bankruptcy Code (IBC) enacted in 2016. Assuming(यह मानते हुए/धृष्ट) that the original(मूल ) resolution(संकल्प) plan submitted to the NCLT stands, the secured(सुरक्षित ) lenders(ऋणदाता) will manage to recover about 85% of their dues. The 15% haircut that they will suffer should be seen against(खिलाफ) the extraordinarily(असाधारण रूप /विशेष रूप से ) high amount of over ₹49,000 crore that is due from Essar Steel. Second, the case, which took 583 days to resolve(समाधान करना/ठानना), compared(तुलना करना) to the 270 days provided under the Code, has tested(परीक्षण ) several aspects(पहलुओं ) of the law and set important(महत्वपूर्ण ) precedents(मिसालें) for the future. Among the aspects that have been clarified(स्पष्ट ) during(दौरान ) the long(लंबे ) resolution(संकल्प) process for Essar Steel are the eligibility(पात्रता/योग्यता) of those who have defaulted(चूकना/पैरवी न करना) in repaying (वापस करना/चुकाना) their borrowings(उधारी) elsewhere(कहीं और) to bid(बोली लगाने), the time-limits for bidding and the place of unsecured(असुरक्षित), operational(परिचालन) creditors under the resolution mechanism. Finally, this was seen as a marquee case for the IBC, given the high profile of the company and its promoters, and the amount at stake(दांव ). The battle(लड़ाई ) royal between multinational players to acquire(प्राप्त करना/अधिकार ) the insolvent company was proof, if any were needed, of the quality(गुणवत्ता ) and importance of the underlying(अंतर्निहित ) asset(संपत्ति). In the event, the successful culmination(सफल /परिणति) of the Essar Steel case will be a big leg-up for the insolvency resolution(समाधान) process that is less than three years old.

To be sure, though the NCLT has given the go-ahead, the last word on the subject may not have been heard as the existing promoters could go in appeal against the verdict(निर्णय) . The Code provides for an appeal to the National Company Law Appellate Tribunal and then to the Supreme Court, and it is unlikely(संभावना नहीं) that the promoters, who bid a much higher ₹54,389 crore, will let go without a fight. The banks, though(हालांकि), will be hoping(उम्मीद ) that the process ends in the next couple of weeks as they would want to account for the receipts(प्राप्तियां) from the resolution(संकल्प ) process within this financial year(वित्तीय वर्ष). After all, only four cases (excluding Essar Steel) out of the initial list(प्रारंभिक सूची) of 12 big defaulters(बकाएदारों ) referred(संदर्भित ) by the Reserve Bank of India for resolution back in June 2017 have been successfully resolved till now. Insolvency and Bankruptcy Board of India data also point to a pile-up(इकट्ठा करना) of cases in the various( विभिन्न ) benches of the NCLT. As many as 275 companies, representing(प्रतिनिधित्व) 30% of the total of 898 undergoing resolution(संकल्प), have exceeded(पार हो गई)the 270-day limit set for resolution(संकल्प) under the Code. This can be partly explained(व्याख्या ) by the attempt(प्रयास) of promoters to tie down the process through appeals at every stage, but the fact is that there is a need for more benches of the NCLT to clear the pile-up. The government would do well to look into this issue.

 

 

Important Vocabulary

 

1. secured(सुरक्षित )
Synonyms: achieve, assure, buy, capture, ensure
Antonyms: fail, forfeit, lose, miss, misunderstand

2. compared(तुलना करना
Synonyms: correlated, related, as to, in comparison, set side by side

3. precedents(मिसालें)
Synonyms: criterion, antecedent, authority, exemplar, instance

4. repaying (वापस करना/चुकाना)
Synonyms: compensate, offset, pay back, refund, reimburse
Antonyms: damage, penalize, disagree, refuse, take

5. culmination(सफल /परिणति)
Synonyms: apex, climax, completion, pinnacle, acme
Antonyms: anticlimax, nadir, base, beginning, bottom

6. battle(लड़ाई )
Synonyms: action, assault, attack, bloodshed, bombing
Antonyms: accord, ceasefire, harmony, peace, retreat

7. stake(दांव ).
Synonyms: pale, paling, picket, post, rod
Antonyms: whole

8. asset(संपत्ति)
Synonyms: aid, benefit, credit, resource, service
Antonyms: hindrance, hurt, injury, disadvantage, liability

9. defaulted(चूकना/पैरवी न करना)
Synonyms: delinquency, nonpayment, absence, blemish, blunder
Antonyms: abundance, accuracy, achievement, adequacy, advantage

10. verdict(निर्णय) .
Synonyms: answer, award, conclusion, decision, decree
Antonyms: accusation

11. exceeded(पार हो गई)
Synonyms: eclipse, outpace, outstrip, top, beat
Antonyms: fall behind, fail, lose, surrender, be inferior

12. verdict(निर्णय)
Synonyms: answer, award, conclusion, decision, decree
Antonyms: accusation

 

 

 

 

Credit To The Hindu News Paper

 

Resolution, at last: on Essar Steel case

Essar Steel case has clarified many aspects of the Insolvency and Bankruptcy Code process
The National Company Law Tribunal’s approval of ArcelorMittal’s bid for the insolvent Essar Steel Ltd. is significant for several reasons. First, the ₹42,000-crore bid will be the largest single recovery of debt under the fledgling Insolvency and Bankruptcy Code (IBC) enacted in 2016. Assuming that the original resolution plan submitted to the NCLT stands, the secured lenders will manage to recover about 85% of their dues. The 15% haircut that they will suffer should be seen against the extraordinarily high amount of over ₹49,000 crore that is due from Essar Steel. Second, the case, which took 583 days to resolve, compared to the 270 days provided under the Code, has tested several aspects of the law and set important precedents for the future. Among the aspects that have been clarified during the long resolution process for Essar Steel are the eligibility of those who have defaulted in repaying their borrowings elsewhere to bid, the time-limits for bidding and the place of unsecured, operational creditors under the resolution mechanism. Finally, this was seen as a marquee case for the IBC, given the high profile of the company and its promoters, and the amount at stake. The battle royal between multinational players to acquire the insolvent company was proof, if any were needed, of the quality and importance of the underlying asset. In the event, the successful culmination of the Essar Steel case will be a big leg-up for the insolvency resolution process that is less than three years old.

To be sure, though the NCLT has given the go-ahead, the last word on the subject may not have been heard as the existing promoters could go in appeal against the verdict. The Code provides for an appeal to the National Company Law Appellate Tribunal and then to the Supreme Court, and it is unlikely that the promoters, who bid a much higher ₹54,389 crore, will let go without a fight. The banks, though, will be hoping that the process ends in the next couple of weeks as they would want to account for the receipts from the resolution process within this financial year. After all, only four cases (excluding Essar Steel) out of the initial list of 12 big defaulters referred by the Reserve Bank of India for resolution back in June 2017 have been successfully resolved till now. Insolvency and Bankruptcy Board of India data also point to a pile-up of cases in the various benches of the NCLT. As many as 275 companies, representing 30% of the total of 898 undergoing resolution, have exceeded the 270-day limit set for resolution under the Code. This can be partly explained by the attempt of promoters to tie down the process through appeals at every stage, but the fact is that there is a need for more benches of the NCLT to clear the pile-up. The government would do well to look into this issue.