SBI-Led Lenders Move To Recover ₹13,751 Crore From Essar Promoters’ Guarantees

A consortium of lenders led by State Bank of India (SBI) has invited bids to sell the personal guarantees of Essar Group promoters Prashant Ruia and Ravi Ruia against residual liabilities worth ₹13,751 crore.

The move comes nearly seven years after the resolution of Essar Steel under India’s bankruptcy process. The reserve price for the sale has been fixed at ₹200 crore, according to documents released by process advisor BoB Capital Markets. Bids have been invited till 17 June.

The liabilities relate to unpaid dues left after lenders recovered a large portion of Essar Steel’s debt through the 2019 takeover by ArcelorMittal India. Banks had recovered close to 90% of ₹49,000 crore at the time. However, the remaining amount, estimated earlier between ₹7,000 crore and ₹9,000 crore, has now risen to ₹13,751 crore after interest accumulation.

Why Are Banks Selling The Guarantees?

The guarantees were issued personally by Prashant and Ravi Ruia, along with corporate guarantees from several Essar-linked entities. These include Essar Investments, Essar Steel Mauritius, Essar Steel Asia and Essar Steel.

Bankers said the recoveries already made under the ArcelorMittal resolution have been adjusted before arriving at the current outstanding amount. The sale process is aimed at helping lenders recover part of the remaining dues through interested buyers.

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What Happens Next?

According to the bid document, interested parties can access the data room for due diligence till 16 June. If lenders receive more than two expressions of interest, an electronic auction will be conducted to identify the highest bidder.

The legal path for such recoveries became clearer after personal guarantees were brought under the insolvency framework in late 2019. In 2023, the Supreme Court also allowed lenders to continue pursuing recovery proceedings against promoters.

Source:

The Economic Times