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<ul><li>The government is looking to increase the accountability of promoters towards their defaulted loans. </li><li>To this effect, the government could amend its bankruptcy law which will allow banks to invoke personal guarantees given by promoters for loans to their companies. </li><li>An appellate court had earlier disallowed such a move, in a case involving the Ruias and their bankrupt Essar Steel. </li></ul> India’s Finance Ministry is sitting on a new amendment to the bankruptcy law. That might be a big setback for the Ruia family, the promoters for the bankrupt Essar Steel, and others who gave personal guarantees against bank loans. As per the current resolution process, lenders can recover a certain portion of the dues from the bankrupt company. The proposed amendment targets personal guarantors to corporate debt. Once amended, the law will allow lenders to recover some ‘more money’ from such guarantors, according to sources who added that the Finance Ministry’s approval is likely in the next few days. A recent ruling by the National Company Law Appellate Tribunal (NCLAT) had disallowed a similar appeal by Essar Steel’s lenders. “Once the debt payable by the ‘Corporate Debtor’ stands cleared in view of the approval of the plan by making payment in favour of the lenders (‘Financial Creditors’), the effect of ‘Deed of Guarantee’ comes to an end as the debt stands paid,” the NCLAT order had said. ”The ‘financial creditors’ in whose favour guarantee were executed as their total claim stands satisfied to the extent of the guarantee, they cannot reagitate such claim from the Principal Borrower,” it added. But the government is intent on ensuring that banks get as much money back as they can, even if it is from the promoter’s personal assets. “If the government is proposing amendments in this space by way of amendment in the IBC (Insolvency and Bankruptcy Code) and if that is so, it would need a parliament approval. We will have to wait and see the nature of amendments to be sure whether parliamentary approval is needed or not. Secondly, I am sure that promoters of various corporate debtors will test any such amendment in a court of law,” said Kunal Tandon, a lawyer who has represented banks in bankruptcy cases. "The matter is subjudice and recovery amounts haven’t yet been crystallised. Hence it is premature to comment," an Essar Group spokesperson told Business Insider. This will be the second change to the bankruptcy law in the last three months In July, the NCLAT approved ArcelorMittal’s ₹42,000-crore ($6 billion) offer for Essar Steel. However, the NCLAT also held that financial creditors (banks) at par with operational creditors (unpaid suppliers, vendors etc). This would have reduced the banks’ share of proceeds from the sale amount. But the government argued that the ruling was against the spirit of the bankruptcy law and process. So it brought in an amendment soon after that allowed the banks to decide how the proceeds of the resolution will be distributed. SEE ALSO: <a href="https://www.businessinsider.in/nclat-clears-arcelormittal-bid-for-bankrupt-essar-steel/articleshow/70071681.cms" data-type="tilCustomLink" target="_blank">ArcelorMittal's bid for the bankrupt Essar Steel clears another hurdle that will give banks 60% off their dues-- butthe appellate order has done something more</a> <a href="https://www.businessinsider.in/a-slowing-indian-economy-is-clouding-over-arcelormittals-6-billion-bid-for-essar-steel/articleshow/71004519.cms" data-type="tilCustomLink" target="_blank">A slowing Indian economy is clouding over ArcelorMittal's $6 billion bid for Essar Steel</a>

EXCLUSIVE: New amendment to bankruptcy law has Prashant Ruia’s personal guarantee on its radar

<ul class="summary-list"><li>Prashant Fonseka was on a flight when he learned that the money he deposited with SVB was safe.</li><li>Fonseka told Insider he heard other people on the plane celebrating with relief at the news.</li></ul>When Prashant Fonseka boarded his Sunday-morning flight from Austin to San Francisco, he turned off the WiFi on his phone; he wanted a break from reading about the collapse of <a href="https://www.businessinsider.com/silicon-valley-bank-failure-what-happened-bank-run-explained-2023-3">Silicon Valley Bank</a>.Just two days prior, US regulators had closed the bank, which had been a Silicon Valley staple popular with venture capitalists and startups. The bank's failure was the <a href="https://www.businessinsider.com/silicon-valley-bank-svb-biggest-bank-failure-since-2008-crisis-2023-3">largest in the US since Washington Mutual's crash</a> during the 2008 financial crisis.Fonseka, who is based in Austin, Texas, is <a href="https://tuesday.vc/" target="_blank" rel="noopener">a partner at the venture-capital firm Tuesday Capital.</a> He told Insider that he spent Friday and Saturday trying to calm the founders of his portfolio companies. He heard that some executives in the industry were even beginning to discuss potential plans for layoffs if they couldn't get access to their deposits.By Sunday, however, he had become more optimistic as he anticipated a response from regulators.Prior to boarding his flight, Fonseka was on the phone trying to confirm the amount of SVB's advanced dividend, or how much money would be guaranteed to be made available to the bank's customers — other people were hoping they might be able to get 50% of their deposits, he said."Fifty percent for most companies would have been enough to cover payroll, which, on Friday, it was," he told Insider in a phone conversation, saying that he thought, "we're not gonna be able to make payroll next week, our banks are frozen, the world is ending."Fonseka said that he heard two people across the aisle from him talking about SVB, so he started making small talk with them."We're kind of joking, 'When this flight lands, we might be in a different universe — something could change,'" Fonseka said. "Everyone was kind of anticipating some kind of announcement."Suddenly, he heard a whoop across the aisle. Fonseka asked the person across what happened."Oh, there's an announcement!" Fonseka said the passenger told him, so he turned his WiFi back on and read the news: federal regulators were stepping in to <a href="https://www.businessinsider.com/us-government-bails-out-silicon-valley-bank-depositors-fdic-2023-3">guarantee SVB customers' deposits.</a>Fonseka said that he celebrated with a fist bump with the person next to him."There was enough of an energy wave that I think people were realizing something had happened," he said, talking about the commotion he heard elsewhere in the plane — The New York Times <a href="https://www.nytimes.com/2023/03/13/technology/silicon-valley-image.html?" target="_blank" rel="noopener">first reported</a> details of the celebration aboard Fonseka's flight.Fonseka said that he felt "massive relief" when his flight landed, and he caught up with another VC he recognized on his flight, who told him that he was feeling "a lot happier.""I was like, 'I'm a lot happier too. Let's rest,'" he told Insider.<div type="image" title="A screenshot of iMessages in dark mode, a blue bubble says &quot;Phew,&quot; the reply says &quot;I'm so relieved&quot; with a crying emoji, and a blue message response says &quot;Crazy few days. Let's take a deep breath.&quot;" height="685" width="1125" msid="98738346" hostid="261"></div>From the plane, Fonseka texted Sy Bohy, the CEO of Seam, which his firm had invested in."Phew," he texted."I'm so relieved," Bohy replied an hour later with a crying emoji."Before, we thought we were going to die — like extinction-level fear about people's companies," Fonseka told Insider. "Basically, we were fine."

Techies on a plane celebrated after hearing a passenger whoop at the news SVB customers would get their money, VC says

New Delhi, Apr 8 () Essar Foundation, the philanthropic arm of Essar Group, on Wednesday said it will provide 1.25 million meals to communities affected by the COVID-19 outbreak and over 1 lakh medical supplies to frontliners combating the pandemic. "Essar Foundation is focussed on providing support to the larger community -- from supplying PPEs, masks, and ventilators to hospitals to providing food to labourers who are finding themselves in a difficult position," said Prashant Ruia, Director, Essar Capital. Stating that the Group plans to do a lot more for the community to play its part in being good corporate citizens, he said, "The Essar COVID-19 Relief Fund is committed to supporting various marginalized groups that are truly in need of funding. This includes transgenders, the homeless, daily wage earners, and women with a background of domestic violence. We have reached out to Essar employees and senior leadership to contribute to the fund." In a statement, the group said Essar Foundation has committed to providing 1.25 million meals to communities affected by the COVID-19 outbreak. It has provided 6.65 lakh meals to communities in need across Maharashtra including frontline doctors, Mumbai police force, slum dwellers, daily wage earners, women with a background of domestic violence and transgenders. As many as 20,000 meals per day have been earmarked to the Maharashtra Chief Minister's Relief Fund routed to marginalised and disadvantaged communities. Also, it has committed to providing over 100,000 medical supplies to frontliners combating COVID-19. Personal Protective Equipment (PPE), N-95, 3Ply face masks, and hand sanitisers have been supplied to over 10 government /private hospitals in Mumbai and over 9 police stations across South Mumbai, the statement said. "Our efforts have been focussed on reaching out to the most vulnerable communities. Being part of the Government of Maharashtra Corona Control CSR Group, we are able to coordinate directly with the state machinery and work jointly with leading groups," said Kaustubh Sonalkar, Group President Human Resource, Essar, and CEO – Essar Foundation. Separately, in an internal message to Essar Group employees, Prashan Ruia said, "For me, the safety of Essarites is paramount; we have always prided ourselves on that count." "We have set up a monitoring committee with all the senior management of Essar. This committee is now meeting daily through virtual means to address the situation that has arisen out of the COVID-19 outbreak. This is a difficult time that many of us have never seen in our lifetimes. However, we have to carry on. Many of our facilities provide essential services so they have to keep operating," he said. He asked employees to stay safe. "Please follow the rules that are being administered by the government and organisations like WHO. They are being implemented for a reason." "In India, many people are flouting these rules. But it is incumbent on us that we not only follow the rules ourselves but also urge other people to do the same. These are clearly unprecedented times. But I am really optimistic that the world will soon find a cure," he said. ANZ ANUANU

Essar Foundation to provide 1.25 million meals, 1 lakh medical supplies for COVID-19 relief

New Delhi, Mar 3 () Bhuwan Chandra Tripathi, former chairman and managing director of state-owned GAIL India Ltd, has joined Ruia-family owned Essar as a non-executive chairman of the Group's Mauritius-based oil and gas firm. "Essar Capital Ltd (ECL), the investment manager of Essar Global Fund Ltd (EGFL), has appointed Tripathi as the non-executive chairman of Essar Exploration and Production Ltd Mauritius (EEPLM) and board member of Essar Oil UK Ltd (EOUKL)," it said in a statement. EEPLM and EOUKL hold key energy assets in ECL's investment portfolio. EOUKL's main asset is the Stanlow oil refinery in the UK. "Tripathi's induction signals EGFL's renewed interest in the energy sector. He will drive the investment strategy and play a key role in providing strategic direction to EGFL," the statement said. reported the move on January 14. Tripathi "is one of the foremost energy strategists in the country. He is credited with transforming GAIL into a multi-asset multinational portfolio company," the statement said. "A person of Tripathi's caliber is an invaluable addition to our leadership team. His exemplary track record in India's energy sector will help EGFL grow and add significant value to our energy investments globally," said Prashant Ruia, Director-Essar Capital. EGFL has invested significantly in conventional and non-conventional oil and gas fields across the world through EEPLM, which manages these investments as an early-stage developer. It has participating interests in conventional oil and gas acreages in India, Vietnam and Nigeria, with an overall resource base of 3.4 barrels of oil equivalent. EEPLM, through its subsidiary Essar Oil &amp; Gas Exploration &amp; Production Ltd (EOGEPL), is India's largest operator of unconventional hydrocarbon acreages located across key sedimentary basins in the country. These acreages have a resource base of 15 trillion cubic feet and include both coal bed methane (CBM) and shale reserves. "EGFL is among the only Indian funds whose investments straddle the entire hydrocarbon value chain, comprising upstream exploration and production, midstream refining and downstream retail globally. I look forward to contributing to the future direction of India's oil and gas economy, in which Essar continues to be a key player," Tripathi on his appointment. The government had in July last year denied Tripathi an extension of service as Chairman and Managing Director of GAIL India Ltd till he reached his superannuation age six months later. Tripathi, 59, who was the youngest person to become a chairman of an oil and gas PSU in August 2009, completed his second five-year term on July 31 and was eligible for an extension till his date of superannuation in January 2020. But, the government declined an extension. As per the government rules, any functional director of a PSU denied an extension of service for reasons other than vigilance is not governed by a mandatory one-year cooling-off period. "No functional director of the company including the chief executive who has retired/resigned from the service of the company, after such retirement/ resignation, shall accept any appointment or post, whether advisory or administrative, in any firm or company, whether Indian or foreign, with which the company has or had business relations, within one year from the date of retirement without prior approval of the government," the rule states. This, however, does not apply to those who are denied an extension for reasons other than proven misconduct. "The term retirement includes resignation; but not in cases where the term of appointment was not extended by the government for reasons other than proven misconduct," the DPE's latest circular issued in April 2018 states. Tripathi was appointed Chairman and Managing Director of GAIL by the Congress-led UPA government in 2009, for an initial five-year term. His extension was due to be reviewed in 2014, but the UPA government in October 2013 approved another five-year term till July 31, 2019. Prior to taking over as CMD, Tripathi had served as Director of Marketing at GAIL from July 2007 to July 31, 2009. NTPC chairman Arup Roy Choudhury was denied an extension in August 2015 during the first term of the Narendra Modi government even though he had two years to go before retirement. In the oil sector, ONGC chairman Subir Raha, GAIL chairman Proshanto Benerjee, Bharat Petroleum chief Ashok Sinha and Indian Oil Corp (IOC) chairman Sarthak Behuria were all denied extensions. ANZ ANSANS

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EXCLUSIVE: New amendment to bankruptcy law has Prashant Ruia’s personal guarantee on its radar

Sriram Iyer

Techies on a plane celebrated after hearing a passenger whoop at the news SVB customers would get their money, VC says

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Essar Foundation to provide 1.25 million meals, 1 lakh medical supplies for COVID-19 relief

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B C Tripathi joins Essar Exploration & Production Mauritius as non-executive chairman

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