Select banks extend gains after SC sets aside NCLAT order in Essar Steel case

Shares of select banks extended gains for the second consecutive session after the Supreme Court ruled in favour of financial creditors in Essar Steel case.

Shares of select lenders were buzzing post the SC ruling on Essar Steel. Canara Bank (up 1.15%), State Bank of India (up 1.09%), Syndicate Bank (up 0.94%), Union Bank of India (up 0.75%), Bank of Baroda (up 0.53%), Punjab National Bank (up 0.48%) and ICICI Bank (up 0.31%) advanced.

The Supreme Court (SC) on Friday said the National Company Law Appellate Tribunal (NCLAT) should not interfere with the decisions of the committee of creditors (CoC) in the Essar Steel insolvency case. Accordingly, SC gave more weightage to the financial creditors.

The SC decision overruled NCLAT's 5 July 2019 judgment that operational creditors should be treated on a par with financial creditors for distribution of funds from ArcelorMittal's bid in the Essar Steel insolvency case. The verdict paves the way for Arcelor's takeover of the bankrupt company.

The CoC had filed petitions against NCLAT's judgment, challenging that they should recover more than operational creditors in the bankruptcy resolution process.

The Ahmedabad bench of NCLAT in March 2019 approved global steel-giant ArcelorMittal's bid for Essar Steel. ArcelorMittal had offered an upfront cash payment of about Rs 42,000 crore to the financial creditors and capital infusion of Rs 8,000 in the next few years. ArcelorMittal's offer did not cover operational creditors to Essar Steel.

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