A decision on the sale of Monnet Ispat and Energy to the JSW Steel-Aion Investments combine was held up in the National Company Law Tribunal (NCLT) on Tuesday after Kotak Mahindra Bank (KMB) requested that it be classified as an assenting creditor. KMB, an unsecured creditor to the steelmaker, said it agreed to the sale of the company under the insolvency process having earlier dissented. The change of stance — from a dissenting to an assenting creditor — will enable the bank to recover at least 5% of its exposure to Monnet Ispat of Rs 73 crore.
The Mumbai bench of the NCLT directed the legal counsel for KMB to file an affidavit with the resolution professional and the committee of creditors (CoC) as it had no jurisdiction over the matter. The Aion Investments-JSW Steel alliance is understood to have offered to pay Rs 3,750 crore for Monnet Ispat, which owes lenders a staggering Rs 12,262 crore.
Banks, however, are expected to receive only Rs 2,750 crore upfront with the rest being invested in the company. That would imply a hefty haircut of close to 80%. In 2016-17, Monnet reported a consolidated net loss of Rs 2,129 crore on net sales of Rs 1,238 crore, according to data from Bloomberg.
Should the NCLT allow KMB to be classified as an assenting creditor, the share of lenders that voted for the sale of Monnet would go up to 99.27%. The CoC, led by State Bank of India and including Punjab National Bank, ICICI Bank and Axis Bank, had approved the sale by a 98.97% vote on April 10 after which a letter of intent was sent to the prospective buyer.
KMB’s legal counsel Darius Khambata told the NCLT on Tuesday that since the resolution plan provided for assenting and dissenting creditors, it had now decided to assent. “And this does not mean I am asking for any change in the plan. Under the plan, the assenting creditors will get some money. If I dissent, I will get nothing,” Khambata said.
The insolvency resolution process for Monnet Ispat began on July 18, 2017, under the provision of the Insolvency and Bankruptcy Code, 2016 (IBC). Sumit Binani was appointed as the RP. Monnet Ispat owns an integrated steel plant of 1.5 million tonnes per annum along with associated facilities including sponge iron plant, pellet plant and a captive power plant in Chhattisgarh. It also owns coal beneficiation facilities in Chhattisgarh and Odisha. The company was one of the top 12 accounts to be referred to the NCLT last year.