Bhushan Steel, Essar Steel, Electrosteel Steels to be referred to NCLT for insolvency proceedings

In a crack down on the surmounting debt of companies, a group of lenders headed by India’s largest bank, State Bank of India, has decided to set out insolvency proceedings against Bhushan Steel, Essar Steel and Electrosteel Steels by sending their cases to the National Company Law Tribunal (NCLT) for recovery under the Insolvency and Bankruptcy Code (IBC).
 
The decision came after a marathon meeting led by the SBI on Thursday, June 23, 2017. All the three companies have large sums of default and are among the top 12 accounts underlined by the RBI for reference to the NCLT. Bhushan Steel has Rs 44,478 crore due to the banks, Essar Steel has a default of Rs 37,284 crore and Electrosteel Steels Rs 10,273.6 crore. While the 12 accounts declared as the top defaulters together constitute a quarter of over Rs 8 trillion NPAs.
 
On being referred to NCLT, the companies will have a 180 day time line to zero in on a resolution plan, with a maximum extension of 90 days. While in case of no resolution plan, the company will be compelled to liquidate.
 
According to various market reports, apart from those three companies, the other companies identified as the stress borrowers include Amtek Auto with a default of Rs 14,074 crore, Alok Industries owing Rs 22,075 crore, Monnet Ispat owing Rs 12,115 crore, Lanco Infra owing Rs 44,364.6 crore, Era Infra Rs 10,065.4 crore, Jypaee Infratech Rs 9,635 crore, ABG Shipyard Rs 6,953 crore and Jyoti Structures Rs 5,165 crore.