Gujarat HC to hear Essar Steel's plea to stay insolvency proceedings today

Firm has a total debt book of Rs 42, 000 crore

The Gujarat High Court will on Friday hear Essar Steel’s petition for staying the insolvency proceedings against the company over a plea submitted by its lenders at the National Company Law Tribunal (NCLT).
 

Adjourning the hearing till July 7, the high court's single-judge bench had asked the Reserve Bank of India (RBI) to submit its reply on the matter even as it ordered the NCLT to hold back insolvency proceedings until the next hearing. 

The RBI is expected to file its reply to the court on Friday and this is could well decide the future of the case. On June 13, RBI had asked banks to initiate insolvency proceedings against 12 debtor companies, including Essar Steel, whose 60 per cent debt had turned bad since March 31, 2017. The total debt amount with regard to these recognised firms stands at over Rs 5, 000 crore.
 

The company, which is among the country’s most stressed asset cases, has a total debt book of Rs 42, 000 crore.

Essar Steel had, in its petition, argued that the RBI notification came at a time when the company was in the process of a recovery and negotiations regarding a restructuring package was already underway with its lenders, following the approval of the company’s board. The company had already spent Rs 3,4000 crore for the same.
 

Meanwhile, international lender Standard Chartered Bank also filed an appeal with a division bench of the Gujarat High Court, requesting it to squash the stay on insolvency proceedings against Essar Steel. The division bench had, however, adjourned the hearing till July 11.