india

Updated: Jan 25, 2019 12:23 IST

The Supreme Court upheld a law that bars founders of loan-defaulting companies from buying back stressed assets put up for sale.

A bench of the Supreme Court said a provision of the bankruptcy law that prevents founders from regaining control of delinquent companies was legally valid. The verdict is a setback for founders of companies including Essar Steel Ltd. who had offered to clear all dues to regain control.

Essar founders Shashi and Ravi Ruia’s bid was against Steel tycoon Lakshmi Mittal’s ArcelorMittal’s Rs 42,000 crore ($5.9 billion) offer to banks and a further Rs 8,000 crore of capital infusion into the company.

The ruling comes days ahead of a pending verdict by the bankruptcy court on the Essar Steel case on January 31.

ArcelorMittal had in October won a bid to acquire debt-laden Essar Steel for over Rs 42,000 crore, a deal that will help fulfil the world’s largest steel maker’s long-time ambition of having an India mill.

A committee of Essar Steel creditors picked ArcelorMittal on October 25, a day when the Ruia family offered to pay lenders Rs 54,389 crore including Rs 47,507 crore in upfront cash to clear all their dues in a last-ditch effort to avert losing their flagship company.