Supreme Court upheld seniority of secured creditors – The Supreme Court (SC) in its judgement has upheld the seniority of secured financial creditors over unsecured financial & operational creditors.

It has also set aside NCLAT's decision of proportionate distribution of claims amongst different class of creditors. The court has clarified that the rights of distribution of claims (commercial decision) are with Committee of Creditors (CoC) and the committee must balance the interest of all stake holders.

This is positive for SBI, ICICI Bank and many PSU banks who have exposure to Essar Steel as it is 100% provided for most banks. SBI is expecting ~INR 170bn of recoveries from three cases under IBC, of which Essar Steel is the biggest. ICICI Bank has said that FY20 credit costs will be ~130bps if IBC recoveries happen as expected.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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