The National Company Law Tribunal (NCLT) has approved Vedanta's resolution plan for Electrosteel Steels, one of the 12 large corporate defaulters referred to it by the Reserve Bank of India (RBI). It's the first of these 12 cases to be resolved under the Insolvency and Bankruptcy Code (IBC). The tribunal accepted the resolution plan put forward by Vedanta for acquiring the business of Electrosteel Steels Ltd. According to a person close to the development, Vedanta is offering close to Rs 5,000 crore for buying the debt-laden steel manufacturer from Kolkata.
The total claims of financial creditors was around Rs 10,000 crore, which means the banks have taken a 50 per cent haircut. The bankruptcy proceeding against the steel-maker was initiated by State Bank of India, which claimed in its application that the Kolkata-based company owed it around Rs 2,500 crore in principal and interest. There were 26 financial creditors in the committee of creditors, all of which agreed to the resolution plan of Vedanta. There were three bidders for Electrosteel -- Vedanta, Tata Steel and Renaissance Steel.
According to the person quoted above, the other bidders can appeal against the decision of NCLT. He though said that representatives of Tata Steel were not looking very aggressive in the NCLT and they may not move the appellate tribunal. However, Renaissance Steel had moved NCLT challenging the eligibility of two of its rival bidders under Section 29A of the IBC, which bars applicants that have "been convicted for any offence punishable with imprisonment for two years or more". It had claimed that Vedanta Resources Plc, holding company of Vedanta, had pleaded guilty to charges against its Konkola Copper Mines for violating violated pollution norms in Zambia back in 2010 while Tata Steel's UK subsidiary had violated the UK Health and Safety at Work Act.