Essar Steel moves Gujarat HC against insolvency proceedings

Essar Steel on Tuesday moved the Gujarat High Court against the insolvency proceedings initiated against its lenders, according to sources privy to the matter.

Contesting the liquidation of the company, Essar Steel challenged validity of the Reserve Bank of India (RBI)'s directive under the Insolvency and Bankruptcy Code (IBC). The company told the Gujarat High Court that it is making an effort to arrive at a satisfactory resolution with lenders, sources told CNBC-TV18.

It also said that Rs 3,200 crore were paid as interest to lending banks including the State Bank of India (SBI) in last eight months, according to sources.

Essar said that they are confident of a turnaround in its business.

The Gujarat High Court will be hearing Essar Steel's plea on July 7, sources said.

On June 23, lenders led by the State Bank of India (SBI) had decided to begin insolvency proceedings against Bhushan Steel, Essar Steel and Electrosteel Steels by referring them to the National Company Law Tribunal (NCLT) for recovery under the Insolvency and Bankruptcy Code (IBC).

Essar Steel has a debt now at Rs 37,300 crore.

Essar Steel is among the 12 accounts identified by the RBI earlier this month for immediate reference to NCLT under the IBC.

The internal advisory committee (IAC) formed under the RBI after its first meeting on June 13 had recommended 12 accounts totalling about 25 percent of the gross NPAs of the banking system for immediate reference under Insolvency and Bankruptcy Code.