Case Studies of Real-Life Negotiations and CoC Voting

 

Case Studies of Real-Life Negotiations and CoC Voting

Case Study 1: Jet Airways (India) Limited

Background:

• Jet Airways, once India’s largest private airline, went into insolvency in 2019. The CIRP was initiated under the IBC after the company defaulted on its debts.

Resolution Plan:

• A consortium of investors (led by State Bank of India (SBI)) proposed a resolution plan that involved restructuring Jet Airways’ debt and bringing in fresh equity.

• The resolution plan was presented to the CoC, which was primarily composed of financial creditors (banks).

Negotiations:

• The resolution plan was heavily negotiated, especially around equity offers and debt restructuring.

• The CoC eventually approved the resolution plan with significant pressure from financial creditors to accept the long-term viability of the airline, which involved capital infusion.

Outcome:

• After intense negotiations, the CoC approved the plan with a 75% majority by value, saving Jet Airways from liquidation. The airline was later restructured and resumed its operations, although the process was complex and faced significant challenges from various creditors.

Case Study 2: Essar Steel India Limited

Background:

• Essar Steel was a leading steel manufacturer that went into insolvency after defaulting on loans, mainly owed to financial creditors.

Resolution Plan:

• The company received multiple bids from potential buyers, including a resolution plan by ArcelorMittal.

Negotiations:

• There was significant disagreement over the treatment of operational creditors, with financial creditors demanding that ArcelorMittal pay off all dues.

• The Supreme Court intervened to ensure that Essar Steel was revived and creditors received their fair share.

Outcome:

• After several rounds of negotiations and court intervention, the resolution plan was approved, and Essar Steel was sold to ArcelorMittal, marking one of the largest insolvency resolutions under the IBC.