SBI-led lenders invite bids for Essar Group promoters’ personal guarantees
Banks seek recovery of Rs 13,751 crore in residual liabilities linked to the Essar Steel resolution, with a June 17 bid deadline.
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- A consortium led by SBI has invited bids for the Ruia promoters’ personal guarantees tied to Rs 13,751 crore in residual Essar Steel liabilities.
- The reserve price is Rs 200 crore, with June 17 set as the deadline.
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Warum es wichtig ist
The story concerns residual liabilities from the Essar Steel bankruptcy resolution, after ArcelorMittal India took over the company in 2019. Lenders had already recovered close to 90% of more than Rs 49,000 crore in dues and are now pursuing the remaining amount through promoter guarantees.
MUMBAI: A consortium of banks led by the State Bank of India (SBI) has invited bids for personal guarantees of Essar Group promoters Prashant and Ravi Ruia against Rs 13,751 crore of residual liabilities after adjusting for recoveries linked to the 2019 debt resolution at Essar Steel.
The reserve price for the bids, with a June 17 deadline, is Rs 200 crore, according to a document on the website of the process advisor, BoB Capital Markets.
The document said the residual liabilities represent the net balance remaining after the mandatory deduction of recoveries realised under the resolution plan in which ArcelorMittal India took over Essar Steel in a bankruptcy administration.
According to a person aware of the details, these recoveries are in lieu of personal guarantees issued by Prashant and Ravi Ruia and corporate guarantees by companies such as Essar Investments, Essar Steel Mauritius, Essar Steel Asia and Essar Steel. The total amount of Rs 13,751 crore was calculated after taking into account the residual recoveries from Essar Steel, including accumulated interest after the ArcelorMittal deal.
Lenders led by SBI had recovered close to 90% of more than Rs 49,000 crore in dues from Essar Steel when the bankruptcy process was completed after a Supreme Court order in 2019. Banks are now moving to recover the residual Rs 7,000 crore to Rs 9,000 crore, which has compounded to Rs 13,751 crore with interest.
Personal guarantees were brought under the bankruptcy purview in December 2019, allowing lenders to initiate recoveries against promoters’ guarantees separately while also pursuing corporate repossessions.
In 2023, the Supreme Court dismissed challenges by promoters against invoking guarantees, allowing banks to restart pursuing these cases.
In this case, BoB Capital Markets has set June 16 for bidders to access the data room for due diligence. If more than two expressions of interest are received, lenders will conduct an electronic auction to find the highest bidder, the document said.
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Lenders will likely proceed with due diligence and may hold an electronic auction if multiple expressions of interest arrive.
Wahrscheinlich · Innerhalb von Tagen
The auction process will continue to focus on recovery rather than a broader restructuring.
Sehr wahrscheinlich · Innerhalb von Wochen
Offene Fragen
- How many bidders are expected to participate in the auction?
- What reserve price, if any, will attract a winning bid above Rs 200 crore?
- How much of the Rs 13,751 crore is realistically recoverable through these guarantees?
