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Last Updated : Nov 15, 2019 04:03 PM IST | Source: Moneycontrol.com

SBI, PNB, Canara Bank, Syndicate, BoI, CBI rally 3-9% after SC verdict on Essar Steel

The Supreme Court said distribution of bid amount of Rs 42,000 crore will take place as per October 23 plan.

 
 
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Shares of PSU banks rallied 1-9 percent on November 15 after the Supereme Court delivered its verdict in the Essar Steel case. SC has set aside the NCLAT judgement, saying the ultimate discretion on distribution of funds is with Committee of Creditors (CoC) which is completely favourable to lenders.

The Committee of Creditors (COC) consists of banks.

The Nifty PSU Bank index climbed 3.5 percent to 2,462.75. Central Bank of India, SBI, Bank of India, Syndicate Bank, Canara Bank, Indian Bank, PNB, Oriental Bank of Commerce, J&K Bank, Bank of Baroda, IDBI Bank, Union Bank and Corporation Bank gained 1-17 percent at the time of publishing this copy.

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The apex court has held that it is the bank's decision to maximise the value of he corporate debtor and added that the CoC should also balance the interests of all stakeholders.

Also Read: Essar Steel insolvency timeline: A saga of many twists and turns in IBC's biggest case

The National Company Law Tribunal (NCLT) cannot interfere with the commercial decisions taken by the CoC, SC said.

If NCLT finds legal parameters not met, it can send back to CoC, but don't tinker with their plan, the court further said.

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The NCLAT earlier said that the funds from the winning bid should be distributed equally among operational and financial creditors.

The issue saw a keen tussle among the banks and separately between the financial institutions and Essar Steel's operational creditors who alleged that ArcelorMittal's winning bid did not meet their dues.

ArcelorMittal already won the bid for Essar Steel, having got the NCLT approval for its Rs 42,000 crore bid.

The court said distribution of bid amount of Rs 42,000 crore would take place as per October 23 plan.

"I must welcome this judgement. IBC being an evolving framework, This ruling will go a long way in setting precedence. It is a large resolution and will help the economy to prosper. Balance sheets of banks will be cleaner, very good decision," Mrutyunjay Mahapatra, MD and CEO at Syndicate Bank told, CNBC-TV18.

The apex court has also relaxed the timeline of 330 days prescribed in Insolvency and Bankruptcy Code (IBC), striking down 'mandatory' completion within 330 days from the IBC.

It is open to National Company Law Appellate Tribunal (NCLAT) to extend the timeline if required, the court said.

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First Published on Nov 15, 2019 11:59 am
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