International lender Standard Chartered Bank filed insolvency proceedings against Essar Steel Ltd. at the National Company Law Tribunal (NCLT) in Ahmedabad, three people familiar with the matter said.
The case was filed after the joint lenders’ forum decided last week to let State Bank of India (SBI) initiate proceedings under the Insolvency and Bankruptcy Code, all three said on the condition of anonymity.
By filing an insolvency case ahead of SBI, the international bank has fast tracked the process, which will force all lenders involved to enter discussions ahead of the decided timeline. The lending consortium, in its last meeting, had also agreed to appoint Alvarez & Marsal (India) Ltd as the insolvency professional in the Essar Steel matter which will replace the board till the resolution process is complete.
SBI and Essar Steel did not immediately respond to separate email queries sent by BloombergQuint, while a Standard Chartered Bank spokesperson declined to comment.
During this week, SBI has filed insolvency cases against Monnet Ispat & Energy Ltd., Electrosteel Steels Ltd. and Jyoti Structures Ltd., BloombergQuint had reported on Tuesday.
Once a case is admitted at the NCLT, a resolution professional is appointed by a committee of financial creditors. This professional replaces the board of the company and conducts all key businesses, while also working on a resolution plan with the lenders. The resolution plan needs to be approved by at least 75 percent of the financial creditors by value and the NCLT before being implemented.
If there is no adequate resolution plan approved within 180 days, the NCLT may give a grace period of another 90 days. If at the end of the 270 days there is still no plan, the company goes into liquidation.
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