Insolvency: JSW Takeover Of Monnet Ispat Not Acceptable, SBI Says

A bid by the Sajjan Jindal-led JSW Group to take over debt-ridden Monnet Ispat and Energy Ltd., is not acceptable in its current form, State Bank of India told the National Company Law Trinubal (NCLT) on Thursday. Lenders currently own over 51 percent of the total shares in the company.

SBI, which heads the consortium of lenders, told the Mumbai bench of the NCLT that Monnet Ispat had defaulted on loans worth Rs 1,539 crore. The company owes the bank Rs 2,242 crore in dues, the lender added.

The bench asked the bank to clarify whether they were pressing their application on the basis of dues or default and adjourned the matter till Monday, July 17.

The tribunal is hearing the case filed by SBI under the Insolvency and Bankruptcy Code (IBC), acting on a Reserve Bank of India directive on June 13 which gives lenders powers to intervene directly in the resolution of nearly Rs 10 lakh crore in stressed assets which have piled up on bank balance sheets.

Delhi-based Monnet Ispat has faced a severe financial crunch owing to the drop in commodity prices and huge steel imports from China. This led to the company's debt ballooning to nearly Rs 12,500 crore. Lenders invoked the strategic debt restructuring (SDR) scheme to convert the company's debt into equity in August 2015 but failed to find a new investor till the JSW Group expressed interest at the start of this year.

Separately, a winding up petition has been filed by creditors of the company at the Chhattisgarh High Court, Monnet’s Ispat’s lawyers informed the NCLT on Thursday. The high court, while dismissing an earlier petition, had permitted the creditors to file a fresh petition, the tribunal was told.