A paradigm shift
The recent order of the Supreme Court may finally end one of the ugliest chapters in the corporate history of independent India. With sale of Essar Steel Limited to ArcelorMittal S. A., the new paradigms in the Indian corporate business and financial market spheres that had been taking shape since past few years may get formalized and gain wider acceptance. The businessmen shall accept that they may no longer remain in control of their businesses if they fail in honoring their debt commitments; and shareholders shall realize that if lenders of a business lose money, nothing shall be left for the equity shareholders. There is a lesson for the small investors who buy stocks of defaulter companies because they are trading at very low price. Under the new paradigm the equity shareholders should expect to get anything only and only if the lenders are able to realize full value of their loans. The theoretical definition of equity shares (Upon liquidation of a business, the e...