Far-reaching: Essar Steel’s complex in Hazira, India
An insolvency court decision in India this week could have far-reaching consequences for public-sector bank restructuring, the distressed debt market, and the overall appetite of international funds for Indian credit.
The ruling concerns Essar Steel India, the most high-profile bankruptcy in the country.
The handling of this case is being seen as a litmus test for India’s ambitions to increase the speed of resolution of a host of failed businesses that are dragging down the books of India’s many public-sector lenders.
Essar is being sold to ArcelorMittal, meaning that creditors will get some of their money back.
However, in a ruling that few saw coming, the National Company Law Appellate Tribunal (NCLAT) has decided that secured creditors won’t be treated any differently than unsecured creditors.
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