OREANDA-NEWS. An Indian court has allowed bankruptcy proceedings to be initiated against more steel mills, continuing a process that has disrupted coking coal sales amid doubts over the company's credit quality.

The National Company Law Tribunal, India's designated bankruptcy court, has asked the creditors of steel producers Monnet Ispat, Bhushan Steel, Bhushan Power & Steel and Electrosteel Steels to reach a debt restructuring agreement within 180 days. Liquidation proceedings will get underway if no agreement is reached and ratified by the court within this period.

The tribunal has appointed administrators to oversee the debt restructuring negotiations and the operations of these companies for the next six months.

Bhushan Power & Steel has 3.5mn t/yr of integrated steelmaking capacity in the eastern Indian state of Odisha. Its parent company Bhushan Steel has 5.6mn t/yr of secondary steelmaking capacity ranging from billet to flat products. Monnet Ispat, which has a 1.5mn t/yr integrated steel plant in the central Indian town of Raigarh, has told the court that an investor is interested in buying the company.

Electrosteel Steels is a subsidiary of ductile pipe manufacturer Electrosteel Casting, which has not been referred for bankruptcy. Electrosteel Steels was set up to build a 2.5mn t/yr integrated steel plant in the east Indian state of Jharkhand. The plant is operating, but its production capacity is unclear.

The court has also concluded a hearing in the bankruptcy case against bigger private-sector producer Essar Steel, but has not yet reached a verdict. The Gujarat High Court in western India last month rejected an appeal by Essar Steel to stop its lenders taking it to the country's bankruptcy court.

Bankruptcy proceedings have disrupted coking coal sales in India, as sellers are not confident about the credit-worthiness of the affected steel producers.