SC order on Essar Steel to reduce long-drawn litigations: SBI Chairman

SC set aside NCLAT order which gave equal rights to the secured and unsecured creditors during insolvency proceedings of debt-ridden Essar Steel, clearing the decks for its takeover by ArcelorMittal

SBI Chairman Rajnish Kumar on Friday said the Supreme Court's judgement in the Essar Steel case with regard to rights of various creditors during insolvency proceedings would significantly reduce the scope for long-drawn litigations and eventually lead to faster resolution of stressed assets.

The Supreme Court on Friday set aside an NCLAT order which gave equal rights to the secured and unsecured creditors during the insolvency proceedings of debt-ridden Essar Steel, clearing the decks for its takeover by Lakshmi Mittal-led ArcelorMittal.

Setting aside the National Company Law Appellate Tribunal (NCLAT) order, a three-judge bench headed by Justice R F Nariman said the two sets of creditors will be treated differently during the insolvency proceedings and taking over of a debt-ridden firm by another company.

The Supreme Court has upheld that the ultimate discretion on distribution of funds is with the Committee of Creditors, Kumar said.

SBI, the country's largest bank, has an exposure of around Rs 14,000 crore in Essar Steel.

"This much awaited judgement also settles to rest numerous points of law under the Insolvency and Bankruptcy Code which were tested in various courts.

"This should significantly reduce the scope for long drawn-litigations under IBC and would eventually lead to faster resolutions of stressed assets," the SBI Chairman said.

SBI's shared closed at Rs 322 on BSE, up 5.19 per cent.