Essar Steel Insolvency: SC quashes NCLAT ruling, clears ArcelorMittal takeover bid; SBI to PNB, bank stocks skyrocket
Essar Steel Insolvency: The Supreme Court has set aside the National Company Law Appellate Tribunal (NCLAT) judgement on Essar Steel case on November 15th.
Essar Steel Insolvency: The Supreme Court has set aside the National Company Law Appellate Tribunal (NCLAT) judgement on Essar Steel case on November 15th. Giving more weight to the Committee of Creditors (CoC) the Apex Court said that the NCLAT should not interfere in the COC decision citing operational creditors should be treated at par with the financial creditors for distribution of funds from ArcelorMittal's bid in the 'Steel King's' insolvency case.
This Supreme Court ruling on Essar Steel Insolvency case has come as a big relief to Lakshmi Mittal as this ruling confirms ArcelorMittal's bid to buy the beleaguered company. In this ruling, the Supreme Court has exempted from 330 days time limit under the Insolvency and Bankruptcy Code (IBC) norms for ArcelorMittal.
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Notably, ArcelorMittal has been trying to buy Essar Steel since 2017 without success.
On July 5th, the NCLAT had delivered judgement in Essar Steel Insolvency case that payments should be made keeping in mind that operational creditors are at par with the financial creditors. Against this NCLAT judgement, the Essar Steel's CoC had gone to the Supreme Court.
Big Boost for the banking sector
This Supreme Court ruling has come as big relief to the Indian banking system as well. According to the market expert Ajay Bagga, this supreme court ruling is good news for Indian banks, markets and the taxpayers. Immediately after the Supreme Court ruling, banking shares began skyrocketing. Corporation Bank share price soared 11 per cent, shares of Central Bank of India shares shot up near 10 per cent, SBI shares scaled near 5 per cent while PNB stock price jumped around 3 per cent.
See Zee Business tweet below:
Essar IBC Case | एस्सार स्टील के इन्सॉल्वेंसी मामले से टैक्सपेयर के लिए अच्छी खबर: अजय बग्गा
— Zee Business (@ZeeBusiness) November 15, 2019
Bagga said that after this ruling State Bank of India or SBI will get Rs 10,239 crore, IDBI Bank will get Rs 4712 crore, Canara Bank is going to get Rs 3639 crore, Punjab National Bank or PNB will get Rs 2860 crore while the private sector bank ICICI Bank will get Rs 2347 crore.