NCLT to hear SBI's insolvency plea against Electrosteel Steels today

Firm was among the 12 companies identified by the RBI

The Kolkata Bench of the National Law Company Tribunal (NCLT) on Monday heard the State Bank of India plea for initiating insolvency proceedings against Electrosteel Steels.
 

Sources close to the development said, the order to admit the plea was awaited. "They have heard the case." Last month, lenders led by SBI had sent Electrosteel Steels to the NCLT for further action under the Insolvency and Bankruptcy Code (IBC).

Electrosteel Steels was among the 12 cases identified by the Reserve Bank of India, initially, to be referred to the NCLT under the IBC, 2016.

A resolution plan for Electrosteel Steels was already being discussed with lenders. The plan was to bring in fresh equity into the company from Abhishek Dalmia of the Renaissance group, besides an infusion of another Rs 1,500 crore as loan from Edelweiss.

All proposals related to the case would be discussed at the NCLT, including those may come up during the course of the resolution. Electrosteel's debt in FY16 stood at Rs 10,274 crore.

To resolve the debt issue, lenders had first applied for the strategic debt-restructuring (SDR) path, available to the firm under the regulator's SDR norms.

The SDR was introduced by the RBI to tackle the issue of burgeoning debt by allowing banks to acquire control of a defaulting company by converting loans into equity. Following this, the banks were supposed to bring in new promoters and upgrade their sticky assets to standard ones.

Earlier, the First International Group had emerged as the shortlisted bidder but the deal fell through, leading to a series of negotiations with other companies.

Eventually, the proposal forwarded by Dalmia and Edelweiss was being discussed when an internal committee, set up by the central bank, sought from the firm the IBC reference of all its accounts with fund and non-fund-based outstanding amounts greater than Rs 5,000 crore with 60 per cent or more classified as non-performing by banks as of March 31, 2016.