Errant debtors are forever looking for ways to undermine creditor protection; but when lenders themselves start making a mockery of a fledgling insolvency law, nobody can save it.
That’s where India’s two-year-old bankruptcy regime is today, brought to the brink of irrelevance by the strain of resolving its most high-profile case: Essar Steel India.
The billionaire Ruia brothers have used every trick in the book to ensure their prized asset stays in the family, despite owing financial creditors 508 billion rupees (Dh26.17bn) in unpaid dues. Just as the process was crawling to a conclusion, with the lenders accepting ArcelorMittal’s 420bn bid for the 10 million tonnes-a-year steel plant, an unexpected wrinkle has emerged. State Bank of India, the largest creditor, has put its entire 154bn rupee exposure on the block.
The bank is saying it would accept more than 96bn rupees today from loan buyers who can then collect 113bn rupees from ArcelorMittal in the future. Assuming that takes another year, an implied annual return of 18 per cent maximum is hardly mouthwatering for a global vulture fund that needs to hedge the currency risk: it would be raising money in dollars and getting paid in rupees.
State Bank should know that any investor group buying out the bank’s loans will do so because it will automatically replace the Indian lender to become the strongest voice on Essar’s all-important creditors’ committee. If this debt holder then backs the Ruias’ last-ditch offer to outwit ArcelorMittal and pay lenders about 544bn rupees - with no clear explanation for where the cash-strapped group is raising the funds - then it’s game over.
Other creditors could go along, especially Standard Chartered, which would get next to nothing out of ArcelorMittal’s proposal anyway. Who knows, by the time the messy situation gets to the Supreme Court for one final, decisive battle for control, the Ruias’ lawyers might just argue that there’s no insolvency to resolve here. After all, the two creditors who moved to have the steel maker declared bankrupt - State Bank and StanChart - are either no longer in the picture or lukewarm to a new owner.
Poor, rich Lakshmi Mittal. He would be left red-faced for thinking that buying assets out of bankruptcy would be his ticket to building a steel empire in his home country. The domestic industry has until now kept the acquisitive global steel baron out of India, where rising incomes and accelerating urbanisation are expected to pick up some of the slack from abroad, with an already overbuilt China witnessing the worst fatigue in car buying in at least two decades.
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Read more:
India's IL&FS a painful reminder to take note of red flags
Mittal's Essar bid overly complicated by legal drama
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Mr Mittal has already set aside 70bn rupees to settle creditor claims in two unrelated Indian bankruptcies - only to become eligible to bid for Essar Steel. If he still fails, investors would worry less about him and more about the signal India would be sending about the integrity of its bankruptcy process. Cases were supposed to be resolved in no more than nine months and it’s already taken a year and a half for Essar.
Large Indian family businesses, it would thus be proven beyond a doubt, are impossible to dislodge. Any constraint that the state seeks to place on their behaviour can always be defeated with the help of supportive partners like Russia’s state-controlled VTB Group, which is the only continuing lender to the Ruias’ holding company.
A bankruptcy law that appears creditor-friendly on paper but can only be used against small entrepreneurs would take the country back to where it was in 2001. Debtors want precisely that, and it’s rational.
Yet if taxpayer-funded Indian state-run banks don’t wield their voting power on creditor committees to push for better outcomes, then the moral core of the bankruptcy code will collapse. The ability of the law to force superior and timely out-of-court settlements would also diminish. Indian creditors’ abysmal recovery rates will remain forever depressed.
A country that needs to sweat every investor rupee and dollar to put its swelling, restive labor force to work will continue to abuse that very thing it doesn’t have enough of: capital.
The bankruptcy law will exist – with dentures in place of teeth.
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Killing of Qassem Suleimani
Company%20Profile
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Company%20Profile
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The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
Book%20Details
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The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
More from Mohammed Alardhi
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
THE SPECS
Engine: 1.5-litre turbocharged four-cylinder
Transmission: Constant Variable (CVT)
Power: 141bhp
Torque: 250Nm
Price: Dh64,500
On sale: Now
The past Palme d'Or winners
2018 Shoplifters, Hirokazu Kore-eda
2017 The Square, Ruben Ostlund
2016 I, Daniel Blake, Ken Loach
2015 Dheepan, Jacques Audiard
2014 Winter Sleep (Kış Uykusu), Nuri Bilge Ceylan
2013 Blue is the Warmest Colour (La Vie d'Adèle: Chapitres 1 et 2), Abdellatif Kechiche, Adele Exarchopoulos and Lea Seydoux
2012 Amour, Michael Haneke
2011 The Tree of Life, Terrence Malick
2010 Uncle Boonmee Who Can Recall His Past Lives (Lung Bunmi Raluek Chat), Apichatpong Weerasethakul
2009 The White Ribbon (Eine deutsche Kindergeschichte), Michael Haneke
2008 The Class (Entre les murs), Laurent Cantet
MATCH INFO
Manchester City 2 (Mahrez 04', Ake 84')
Leicester City 5 (Vardy 37' pen, 54', 58' pen, Maddison 77', Tielemans 88' pen)
Man of the match: Jamie Vardy (Leicester City)
Ticket prices
- Golden circle - Dh995
- Floor Standing - Dh495
- Lower Bowl Platinum - Dh95
- Lower Bowl premium - Dh795
- Lower Bowl Plus - Dh695
- Lower Bowl Standard- Dh595
- Upper Bowl Premium - Dh395
- Upper Bowl standard - Dh295
Results
4.30pm Jebel Jais – Maiden (PA) Dh60,000 (Turf) 1,000m; Winner: MM Al Balqaa, Bernardo Pinheiro (jockey), Qaiss Aboud (trainer)
5pm: Jabel Faya – Maiden (PA) Dh60,000 (T) 1,000m; Winner: AF Rasam, Tadhg O’Shea, Ernst Oertel
5.30pm: Al Wathba Stallions Cup – Handicap (PA) Dh70,000 (T) 2,200m; Winner: AF Mukhrej, Tadhg O’Shea, Ernst Oertel
6pm: The President’s Cup Prep – Conditions (PA) Dh100,000 (T) 2,200m; Winner: Mujeeb, Richard Mullen, Salem Al Ketbi
6.30pm: Abu Dhabi Equestrian Club – Prestige (PA) Dh125,000 (T) 1,600m; Winner: Jawal Al Reef, Antonio Fresu, Abubakar Daud
7pm: Al Ruwais – Group 3 (PA) Dh300,000 (T) 1,200m; Winner: Ashton Tourettes, Pat Dobbs, Ibrahim Aseel
7.30pm: Jebel Hafeet – Maiden (TB) Dh80,000 (T) 1,400m; Winner: Nibraas, Richard Mullen, Nicholas Bachalard
The specs
Engine: 3.8-litre, twin-turbo V8
Transmission: seven-speed automatic
Power: 592bhp
Torque: 620Nm
Price: Dh980,000
On sale: now
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
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COMPANY%20PROFILE
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Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
