Standard Chartered has initiated a corporate insolvency resolution process against Essar Steels in the Ahmedabad Bench of the NCLT..On June 22, a Joint Lenders Forum meeting led by State Bank of India (SBI) had decided to initiate proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) against three steel cos. namely – Essar Steel, Bhushan Steel and Electrosteel Steels, reports Bloomberg Quint..These three companies collectively account for nearly one lakh crore worth of debt that has turned bad..The lending consortium, in the last meeting, had also agreed to appoint Alvarez & Marsal (India) Ltd as the insolvency professional in the Essar Steel matter which will replace the board till the resolution process is complete..Once the application filed by a financial creditor under Section 7 of the IBC is admitted by the NCLT, a moratorium period of 180 days commences. During this moratorium period, the board of the defaulting entity is replaced with a resolution professional, who discharges the functions of the board till the time resolution process is completed..A committee of (financial) creditors is also constituted during this period by the resolution professional and a number of decisions listed in Section 28 of the IBC are taken with 75% majority of the votes of members of the committee..The 22nd June consortium meeting was held shortly after the Reserve Bank of India’s Internal Advisory Committee had identified 12 (undisclosed) non-performing accounts, which it said account for about 25% of the country’s total bad loans..RBI has been (apparently) rapidly shifting gears on tackling bad loans, more so after it received the President’s assent on an Ordinance, which amended Section 35A of the Banking Regulation Act, 1949 – an amendment which gave RBI more teeth to intervene in the functioning of banking companies..While Standard Chartered has taken the lead on Essar Steels, SBI has also taken action against the other steelmakers Monnet Ispat, Electrosteel Steels and a power distribution company Jyoti Structures Ltd..Image taken from here.
Standard Chartered has initiated a corporate insolvency resolution process against Essar Steels in the Ahmedabad Bench of the NCLT..On June 22, a Joint Lenders Forum meeting led by State Bank of India (SBI) had decided to initiate proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) against three steel cos. namely – Essar Steel, Bhushan Steel and Electrosteel Steels, reports Bloomberg Quint..These three companies collectively account for nearly one lakh crore worth of debt that has turned bad..The lending consortium, in the last meeting, had also agreed to appoint Alvarez & Marsal (India) Ltd as the insolvency professional in the Essar Steel matter which will replace the board till the resolution process is complete..Once the application filed by a financial creditor under Section 7 of the IBC is admitted by the NCLT, a moratorium period of 180 days commences. During this moratorium period, the board of the defaulting entity is replaced with a resolution professional, who discharges the functions of the board till the time resolution process is completed..A committee of (financial) creditors is also constituted during this period by the resolution professional and a number of decisions listed in Section 28 of the IBC are taken with 75% majority of the votes of members of the committee..The 22nd June consortium meeting was held shortly after the Reserve Bank of India’s Internal Advisory Committee had identified 12 (undisclosed) non-performing accounts, which it said account for about 25% of the country’s total bad loans..RBI has been (apparently) rapidly shifting gears on tackling bad loans, more so after it received the President’s assent on an Ordinance, which amended Section 35A of the Banking Regulation Act, 1949 – an amendment which gave RBI more teeth to intervene in the functioning of banking companies..While Standard Chartered has taken the lead on Essar Steels, SBI has also taken action against the other steelmakers Monnet Ispat, Electrosteel Steels and a power distribution company Jyoti Structures Ltd..Image taken from here.