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Essar Steel Verdict – Landmark Judgement
November 30 , 2019
1854 days
1956
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- In a landmark judgment, the Supreme Court has upheld the supremacy of the “Committee of Creditors” comprising the Financial Creditors of the bankrupt firms over the distribution of claims.
- In doing so, the apex court has given more weight to the financial creditors than operational creditors.
- It has ruled that the two sets set of creditors will be treated ‘differently’ during the insolvency proceedings and during taking over of a debt-ridden firm by another company.
Background
- The Ahmedabad bench of National Company Law Tribunal had in March 2019 approved global steel-giant Arcelor Mittal’s bid for Essar Steel.
- Arcelor Mittal’s offer did not cover operational creditors to Essar Steel.
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