NCLAT Upholds Electrosteel Steels Sale To Vedanta
The National Company Law Appellate Tribunal ruled that Vedanta Ltd. is eligible to bid for Electrosteel Steels Ltd., upholding the sale of the debt-ridden company to the Anil Agarwal-group firm.
A two-judge bench of NCLAT, headed by SJ Mukhopadhaya, rejected appeals against Electrosteel Steels sale to Vedanta. However, the lawyer for Renaissance Steel India Pvt. Ltd., which had challenged the sale to Vedanta, said they would move the Supreme Court against the NCLAT decision.
The National Company Law Tribunal had approved a resolution plan submitted by Vedanta for Electrosteel Steels in April, making it the first among the 12 large stressed accounts identified by Reserve Bank of India last year to get resolved under the Insolvency and Bankruptcy Code.
The resolution plan involved close to Rs 5,300 crore cash payout and a haircut of 60 percent for lenders. Electrosteel Steels owes banks more than Rs 13,000 crore, of which about Rs 5,000 crore is to State Bank of India alone.
The resolution process began when SBI filed an insolvency plea in the Kolkata NCLT against the company. The petition was admitted in July 2017.
On April 17, the NCLT-Kolkata bench of Justice Jinan KR and Justice Madan Balachandra Gosavi approved Vedanta’s bid to acquire Electrosteel Steels. The tribunal rejected the objection by Renaissance Steel India Pvt. Ltd. It had argued that Vedanta was ineligible to bid as one of its affiliates was found guilty in Zambia of environmental regulations violation.
The company approached the NCLAT against the order of the NCLT. The appellate tribunal, however, didn’t stop the process, allowing Vedanta to deposit Rs 5,320 crore to acquire Electrosteel Steels. The tribunal also refused to stay the delisting of Electrosteel Steels initiated by Vedanta.