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Banks will Take NCLAT to SC on Essar Steel Order - SBI chairman

Steel News - Published on Thu, 11 Jul 2019

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PTI reported that State Bank chairman Mr Rajnish Kumar said that lenders will soon be moving the Supreme Court against National Company Law Appellate Tribunal awarding higher payout to Essar Steel's operational creditors and treating them on par with secured lenders. He said "If secured creditors are given the same treatment as operational creditors, then it is a huge disincentive for secured creditors and an incentive for operational creditors. With this ruling, bankers will be hesitant to use the IBC provisions for resolving bad asset till such a time that the principles of the law are clearly laid out.”

He hoped that the Supreme Court will clarify the same once they challenge the Essar Steel order by the NCLAT.

Mr Kumar suggested that the lack of distinction between secured and operational creditors only aggravates the situation around resolution, pointing out that already, there is a lot of extra time taken for resolutions.

He added "Banks have not signed inter-creditor pacts in all cases, and wherever it is felt that it cannot be resolved and despite Essar Steel order, if banks still have felt NCLT is a better option, they have taken such accounts to NCLTs.”

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Posted By : Ratan Singh on Thu, 11 Jul 2019
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