ArcelorMittal Nippon Steel India (AM/NS) has completed the final leg of the landmark Essar Steel insolvency resolution by paying ₹200 crore to a consortium of lenders led by State Bank of India (SBI) to acquire the personal guarantee claims against Essar group promoters Prashant Ruia and Ravi Ruia,
The Economic Times (ET) reported. The transaction effectively brings closure to one of India's largest and most closely watched corporate insolvency cases.
According to the ET report, the transaction was completed earlier this month after no competing bidder emerged during a Swiss challenge auction. It enables AM/NS to take over the banks' claims arising from personal guarantees furnished by the Ruia brothers.
The guarantees represent the final unresolved liabilities linked to the 2019 resolution of Essar Steel under the Insolvency and Bankruptcy Code (IBC).
Residual Claims of ₹13,751 Crore
According to the newspaper, the SBI-led consortium had invited bids in May this year for the assignment of the Essar promoters' personal guarantees at a reserve price of ₹200 crore against residual claims of ₹13,751 crore.
The amount represented recoveries outstanding after accounting for proceeds received under the 2019 Essar Steel resolution plan, including accumulated interest.
The package offered by the lenders also included corporate guarantees issued by Essar Investments, Essar Steel Mauritius, Essar Steel Asia and Essar Steel Ltd, in addition to the personal guarantees provided by the Ruia family.
Quoting people familiar with the matter, ET said the guarantees were offered for sale through an assignment of claims on an 'as-is basis' without recourse. AM/NS's bid was accepted following legal scrutiny.
"The debt has been assigned to AM/NS and money already received by banks," ET quoted a person familiar with the development as saying. According to the newspaper, neither AM/NS nor Essar commented on the transaction.
Final Piece of the 2019 Resolution
The transaction completes a commitment that formed part of AM/NS's successful resolution plan when it acquired Essar Steel through the insolvency process in 2019.
However, the transfer of the guarantees had been delayed because of legal issues.
According to ET, the banks held claims under the personal guarantees furnished by the Essar promoters, and AM/NS's original resolution plan specifically envisaged settlement of these liabilities once the legal hurdles were cleared.
The Essar Steel resolution remains one of the largest recoveries achieved under the IBC.
Lenders led by SBI recovered more than ₹49,000 crore—nearly 90% of their admitted claims—after the insolvency process concluded following a Supreme Court judgment in 2019.
According to ET, the remaining recoveries, initially estimated at between ₹7,000 crore and ₹9,000 crore, subsequently increased to ₹13,751 crore due to accumulated interest and continued to be pursued through personal and corporate guarantees.
Importance of Personal Guarantees
The transaction also underscores the growing importance of personal guarantees within India's insolvency framework.
Personal guarantors to corporate debtors were brought under the insolvency regime in December 2019, allowing lenders to initiate separate recovery proceedings against promoters even after the completion of corporate insolvency proceedings.
The Essar Steel case is among the most prominent examples of banks using this mechanism to recover residual value from promoters after the resolution of a stressed asset.
Significance for Banks
The completion of the guarantee assignment effectively closes one of the banking sector's oldest legacy bad loan recoveries.
Although the ₹200 crore realised through the assignment is only a fraction of the ₹13,751 crore residual claims, the transaction enables lenders to remove the remaining exposure from their books and conclude a recovery process that has continued for several years after the principal insolvency resolution.
For the banking sector, the closure reinforces the effectiveness of the IBC in resolving large stressed assets while demonstrating that recoveries through personal guarantees can continue even after the main corporate insolvency process has concluded.
Essar's Debt Reduction Programme
The latest development comes against the backdrop of Essar group's broader asset monetisation programme.
In August 2026, Essar announced the signing of definitive agreements with ArcelorMittal Nippon Steel for certain ports and power infrastructure assets serving the Hazira steel plant.
The transaction also included plans for a 50:50 joint venture between Essar and ArcelorMittal to develop a 4-million-tonnes-per-annum liquefied natural gas (LNG) terminal at Hazira in Gujarat.
At the time, Essar said the transaction would conclude its planned asset monetisation programme and complete repayment of about US$25bn (billion), or around ₹2 lakh crore, of debt to the Indian banking system.
The group also outlined plans to reinvest in energy, infrastructure, metals and mining, and technology businesses, with a focus on decarbonisation and digitalisation, following completion of its de-leveraging programme.
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