Finally, Essar steel is sold out. ArcelorMittal is coming to India, and banks are receiving money.

IBC is beyond doubt one significant REFORM in the Indian financial sector. Moreover, it is one giant step toward closure to the cleanup of the twin balance sheet crisis.

This case saw many ups and downs and possibly lower drama, but the Essar and Ruia Family Tried everything. From introducing NuMetle to going to the supreme court and so on. But what happened finally was The family gold going out of the hand of the Essar group. A strong message was delivered to the people who kept thinking that Lender’s money is also their own money and that it is not needed to repay.

It is A big case, so that I will think about it from all perspectives.

From the company Perspective: ArcelorMittal Nippon steel India private limited (formerly Essar steel India Pvt Ltd) is one of the leading steelmakers. They have a fully integrated flat carbon steel manufacturer – from iron ore to ready-to-market products – with a current capacity of 10 million tonnes per annum (MTPA). Essar Steel’s manufacturing facility comprises ore beneficiation, pellet making, iron making, steel making, and downstream facilities, including a cold rolling mill, galvanizing, pre-coated facility, steel processing facility, and an extra-wide plate mill, and a pipe mill. Their website gives all information about their products and facility. It was the most significant asset on the block for Bankruptcy and received an immense amount. It is one big success for the IBC.

From promoter: Shashi Ruia and Ravi Ruia, commonly referred to as the Ruia Brothers, are Indian billionaires and owners of Essar Group, founded in 1969. In 2012, Forbes named the Ruia brothers the world’s richest Indians, with a net worth of US$7 billion.

Essar Group, founded by Shashi Ruia and Ravi Ruia in 1969 as a construction company, later diversified into various core sectors to become one of India’s giant multinational conglomerates.

Essar Global Fund Limited (EGFL) controls several assets across the core sectors of Energy (Oil Refining, Oil & Gas Exploration & Production, Power), Infrastructure (Ports, Projects), Metals & Mining, and Services (Shipping, Oilfield Services, IT). EGFL holds a near 100% stake in all its investments.

In some cases, especially after the global financial crisis, the debt burden increased, and promoters failed.

According to an Economic Times report, the account had gone into a corporate debt restructuring in 2002, with a debt of Rs 2,800 crore. It, however, managed to exit the CDR ahead of schedule in 2006.

A new cycle of distress began after the rapid expansion of Essar Steel’s Hazira steel operations at the turn of the decade. The expansion plan failed due to a delay in environmental approvals and the non-availability of natural gas, which was necessary for the plant to work at maximum efficiency. As a result, by 2015, the company was saddled with financial creditor dues exceeding Rs 49,000 crore. At a meeting in November 2015, the lenders to Essar Steel, led by State Bank of India and ICICI Bank, had discussed the option of converting a portion of the company’s debt into majority equity, which could be sold to potential investors later.

However, the plan was put on hold after the Ruia family told the lenders that they were willing to sell the company through an M&A process. The lenders appointed SBI Capital Markets and ICICI Securities to look for potential buyers, Essar Steel had confirmed then. While the search for a new bidder was on, the RBI concluded its asset quality review and asked banks to classify multiple large accounts, including Essar Steel, as non-performing assets by March 2016. In June 2017, lenders received a list of 12 stressed accounts from the RBI for immediate insolvency action under the newly enacted Insolvency Code. Essar Steel’s name featured among the largest of the 12 accounts. Insolvency became a reality. The account was finally admitted to the National Company Law Tribunal in August 2017.

As per the order of the National Company Law Tribunal (NCLT) dated August 2, 2017, Essar Steel was admitted into insolvency proceedings, and Mr. Satish Kumar Gupta was appointed as Interim Resolution Professional by NCLT. Satish Kumar Gupta was appointed as the Resolution Professional (RP) on September 1, 2017. RP issued an Expression of Interest on October 6, 2017, and a Request for Proposal on December 24, 2017. Accordingly, two Resolution Plans were received on February 12, 2018, from ArcelorMittal and Numetal. After evaluating the Plans under Section 29A of IBC, the Resolution Professional held that both Resolution Applicants were ineligible. The reason was that both were directly or indirectly connected with at least one Non-Performing Asset. Accordingly, it was challenged in NCLT.

National Company Law Appellate Tribunal (NCLAT) passed its order on September 7, 2018, and upheld the resolution professional’s view that the first round of bids submitted in February 2018 was ineligible. ArcelorMittal challenged the above in the Hon’ble Supreme Court.

On October 4, 2018, the Hon’ble Supreme Court gave its order, thereby removing the ambiguity over the interpretation of the Section 29A of IBC and also upheld the ineligibility decision of the Resolution Professional but also provided another chance to both parties to clear any past outstanding dues and resubmit the Resolution Plan. After that, ArcelorMittal earned about Rs 7,500 crore rights to lenders of Uttam Galva and KSS Petron.

The Committee of Creditors approved the Resolution Plan of ArcelorMittal on October 25, 2018.

On 14-16 December, ArcelorMittal paid the amount into an escrow account; SBI was expected to pay the amount as per the loan given to the company 0n December 16, 2019. the amount. The rough number is as follows.

SBI Lend Rs 13226 cr. Received 12,161 cr. IDBI Bank Loan 2,481 cr, Received 2,281cr.  Canara Bank Loan 3798 cr. received 3,493 cr. Edelweiss ARC bought Rs ( 602 + 92 + 1,697 + 993 + 1,966 + 554 + 137 + 1,237 + 978 + 10) cr of HDFC bank, federal bank, ICICI Bank, Axis Bank, Indian overseas bank, J&K Bank, Lakshmi Vilas Bank, Bank of Baroda, HDFC, Received ( 554 + 84 + 1,561 + 913 + 1,808 + 510 + 126 + 1,171 + 900 + 9) Standard chartered bank only get 6 cr out of their 3557 cr.

No doubt, This will be one landmark case.