The Gujarat High Court has dismissed Essar Steel’s petition against RBI (Reserve Bank of India). The court said that no relief will be given to the debt-laden company with respect to the Insolvency and Bankruptcy Code (IBC), according to reports.
Earlier this month, Essar Steel moved Gujarat High Court challenging bankruptcy proceedings .The Gujarat High Court awarded interim relief to Essar Steel, staying further hearings in Essar Steel case before Ahmedabad National Company Law Tribunal (NCLT), which is hearing loan recovery case proceedings initiated by the RBI.
Today’s high court decision might come as a relief to lenders, who got sceptical of the prospects of recovery from 12 biggest loan defaulters, as they feared the others may also move courts to stall bankruptcy proceedings and delay the retrieval after the interim relief to Essar Steel.
Essar Steel, in its petition, had appealed that the RBI notification arrived even while the firm was trying to implement a board-approved restructuring package. It also said that it has repaid almost INR 34.67 billion in last one year, adding that it employs 4,500 people and that if action was taken under the provisions of sections 7, 16 and 17 of the Insolvency and Bankruptcy Code (IBC), the administration of the company would go into hands of interim resolution professionals (IRP) and it would result in the closing down of the company.
On its part, the RBI contested in the court that it is not singling out Essar Steel for insolvency proceedings, and that all the big loan defaulters with outstanding loans above INR 50 billion would be subject to the same.
~Sourced~
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