The Supreme Court has order status quo on the NCLAT's order on Essar Steel. Suharsh Sinha of AZB & Partners said one needs to wait and see what the exact order is of the Supreme Court.
“What narrated is true then it is quite encouraging because there was a lot of consternation caused by the NCLAT order,” he added.
“Issues such as commercial decision making of the CoC, distribution of proceeds, treating secured and unsecured creditors at par and not only that even treating operational creditors at par with secured financial creditors. These are things which have shaken the banking industry because these are basic and core banking principles from which the NCLAT had departed,” Sinha further added.
“The only thing which has not been touched upon in the observations is the issue of promoter guarantees because NCLAT also said that once a resolution plan has been proposed then the promoters are completely off the hook and that’s not been addressed in the amendment bill,” said Sinha.
“Even if the amendment bill is brought in, there are few aspects of the NCLAT order that still needs to be agitative before the Supreme Court,” added Sinha.