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Essar Steel Hearing Restarts at Supreme Court

Steel News - Published on Wed, 16 Oct 2019

Image Source: BloombergQuint
The Committee of Creditors of Essar Steel defended lower pay out to Standard Chartered Bank despite it being a secured financial creditor, reasoning that its security was different and lower from other lenders of the debt-laden steel maker. Challenging the National Company Law Appellate Tribunal’s decision allowing higher payout to Operational Creditors, the CoC told the Supreme Court that there had to be difference between the money distributed as the OC would continue to be working with the new resolution applicant which takes over. The court will continue hearing the case on Wednesday.

During a hearing in August, the SC had observed that if the law allowed banks to decide that while they would take haircuts, they could give nothing to the operational creditor, it was bad law. SC had said “If this is not addressed even in the amendments, it is a major lacuna. The amendments, instead of addressing the issue, aggravate it,” the court had then said. The financial creditors to Essar Steel had then tried to justify the latest amendments made to the IBC by claiming that the difference between them and the OCs was that they were secured lenders as opposed to the latter. The court had, however, observed that as there was no monopoly of any operational creditor, it was possible that a new management could switch to another service provider instead of the old one.”

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Posted By : Amom Remju on Wed, 16 Oct 2019
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