State Bank of India Chairman Rajnish Kumar on Monday said recoveries from resolution of the Essar Steel insolvency case will add to the lender’s profit in this quarter ending December.
Kumar spoke to business news channel after the Supreme Court on Friday gave its verdict in favour of committee of creditors’ (CoC) decision, paving the way for ArcelorMittal’s entry into India. With its judgment, the apex court also ended an over two-year long legal battle to acquire Essar Steel.
“We have provided 100% (for Essar Steel). Whatever recovery comes from Essar Steel, it will go to the bank’s P&L (profit and loss) account,” Kumar said, adding that all recoveries where the bank has made 100% provisions will straight away go into the lender’s profit and loss books.
Essar Steel owed its financial creditors ₹49,473 crore, of which State Bank alone had an exposure of ₹13,226 crore to the steel company. Total outstanding, including claims of financial as well as operational creditors, stood at ₹54,565 in India’s one of the biggest insolvency cases.
The Supreme Court on Friday said the National Company Law Appellate Tribunal (NCLAT) should not interfere with the decisions of the CoC in the Essar Steel insolvency case. In doing so, the apex court gave more weight to the financial creditors and overruled NCLAT’s July 5 judgment that operational creditors should be treated on a par with financial creditors for distribution of funds.
The CoC had filed petitions against NCLAT’s judgment, challenging that they should recover more than operational creditors in the bankruptcy resolution process.
Source: Livemint, November 18, 2019