NCLT admits SBI’s insolvency plea against Electrosteel NECK DEEP IN DEBT

The Kolkata Bench of the National Company Law Tribunal (NCLT) has admitted the State Bank of India's insolvency petition against Electrosteel Steels.

A PwC partner has been appointed as the interim resolution professional (IRP). "The court order is expected to be served by Monday. The board will be suspended after that," said Ashutosh Agarwal, chief financial officer, Electrosteel Steels.

Agarwal said the IRP would be working with the existing management in running the company. The IRP will now have to take financial calls and constitute a committee of creditors within 30 days. In the next 150 days, a resolution plan will have to be worked out. The IRP will also have to advertise and invite bids for Electrosteel Steels.

The best proposal would then be selected to arrive at a resolution plan, which would have to be approved by at least 75 per cent of the creditors by value before it goes to the NCLT. If there is no agreement in 180 days, then under special conditions, an additional 90 days could be granted.

A resolution plan for Electrosteel was already being discussed before the SBI sent it to the NCLT under the Insolvency and Bankruptcy Code, 2016. Electrosteel happened to be among the 12 cases identified by the Reserve Bank of India, initially, to be

Electrosteel’s debt in FY16 stood at ~10,274 crore and lenders had first applied for the strategic debt restructuring (SDR) path to resolve the issue

Following this, the banks were supposed to bring in new promoters and upgrade their sticky assets to standard ones

Electrosteel was the first case where lenders invoked the SDR mechanism referred under the IBC.

According to the resolution plan under discussion, Abhishek Dalmia of the Renaissance group was to bring in fresh equity, besides bringing ~1,500 crore as loan from Edelweiss. However, that proposal would now become null and void as the company would have to go through a bidding process.

Electrosteel's debt in FY16 stood at ~10,274 crore and lenders had first applied for the strategic debt restructuring (SDR) path to resolve the issue. Following this, the banks were supposed to bring in new promoters and upgrade their sticky assets to standard ones. Electrosteel was the first case where lenders invoked the SDR mechanism.

In the bidding that followed, First International Group had emerged as the shortlisted bidder, but the deal fell through, leading to a series of negotiations with other companies.

A PwC partner has been appointed as the interim resolution professional