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ET Markets

Lenders, Ruias plan to move SC on NCLAT Essar order

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Readers' opinions (3)

Sanjay Kohli IP (Delhi)

The Essar - ArcelorMittal, ruling is welcome, pointing out the inherent "Conflict of Interest" which the Committee of Creditors ( COC ) has, while considering & accepting a "Resolution Plan". Hence, this ruling will provide the much needed formula to satisfy the Operational Creditors'', who may continue their relationship with Resolved entity, which would also be required for smooth functioning of the business, during the Corporate Insolvency Resolution Process ( CIRP ) as well as, once Resolution is achieved. The explanation offered, differentiating Financial Creditors and Operational Creditors, originating from the BLRC Report is also appropriate in it''s own place, for the limited purpose of formation of the Committee of Creditors, which is a substitute to the Board of Directors. As a Resolution Professional ( RP ) is to play the part of the CEO/Managing Director/Chairman (Which one, or all - this also needs to be sorted out in due course).

COC has started acting as if they are owners of assets and whatever way they decide on distribution, should be acceptable to all. But secured lenders forget that shortfall in recovery may also be recoverable from personal guarantee of promoters and same is not being disclosed before in resolution plans. Let''s still wait further 2/3 months for Supreme Court decision on this. In the meanwhile if Arcelor withdraws it''s plan looking to delay, whole proceedings will be null and void. And last alternate will be to liquidate.

Ram Nath replies to Njsanghviindore Sanghvi

Yes school should not intervene when the ibc have given verdict

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