IDBI BankBSE 2.54 % has initiated bankruptcy proceedings against Odisha Slurry Pipeline Infrastructure (OSPI) to recover Rs1,670 crore collectively on behalf of lenders, complicating the company’s proposed sale and creating uncertainties over the debt resolution at Essar SteelBSE 0.41 %.
This development comes at a time when Numetal, a joint venture between Russia’s VTB and Rewant Ruia (a member of the Ruia family), has proposed to buy both Essar Steel and OSPI. The latter owns a 253-km slurry pipeline that moves iron ore from its base in the Orissa hinterland to Essar Steel’s pellets plant. Two senior banks officials told ET that IDBI bank has referred OSPI to the Kolkata bench of National Company Law Tribunal on Monday. The lender has suggested Ashish Chhawchharia, backed by consulting firm Grant Thornton, as the interim resolution professional.
Lenders decided to refer the company to NCLT after Numetal proposed to buy out banks opposing its purchase of the OSPI stake from Srei infrastructure. The Delhi High Court has ordered a stay on the stake sale.
Furthermore, the resolution professional, Satish Gupta, who is backed by Alvarez & Marsal, has not admitted the lenders’ claims for OSPI while calculating the dues of Essar Steel. Srei Infrastructure did not respond to an email by ET.
Bankers believe that once the company is admitted into NCLT, the standstill clause would come into effect, preventing lenders from selling their loans to Numetal.
“Secondly, the buyer for Essar Steel will want to have full access to the pipeline, failing which the negotiating power of lenders would become weak,” he added.
