14 March 2019: The NCLT while approving ArcelorMittal’s resolution plan has made some observations on the treatment of creditors and statutory concessions.
Bulk of 160-page order quotes precedents for justifying its stance. The order disposes of several applications, most of which deal with claims made by various creditors. Among them, Standard Chartered Bank, a dissenting financial creditor got some relief. It sought to quash the resolution that approved the resolution plan, and in the alternative, receive equitable treatment under the resolution plan. It was stated that SCB got only 1.7% of its total dues while other financial creditors were receiving around 92%.
While the NCLT declined to quash the creditors’ committee resolution approving the resolution plan, it ruled against this unequal treatment of distribution amongst financial creditors and ordered a pro-rated distribution of resolution amount between all financial creditors.
The promoters further sought to quash the resolution arguing their right to receive a copy of the resolution plan citing a recent Supreme Court judgment. The NCLT noted that at the time of approval of the resolution, the NCLAT direction was in place which was, in fact, the opposite, as it did not require suspended management to access the resolution plan. The Bench further noted that, the promoters had anyway offered for settlement and were evidently well aware of the contents of the approved resolution plan. In such a case, it rejected the plea for remitting the case back to the creditors.
The approved resolution plan further sought various exemptions such as stamp duty, fees, transfer charges, transfer premium etc. The NCLT held that it is not in a position to grant these exemptions and that the resolution applicant will have to make appropriate submissions to the respective departments of the government.
The NCLT provided a time frame of 1 year to the resolution applicant to obtain various approvals and exemptions. It also found that those parts of the resolution plan which are severable in this regard will be severed if unsuccessful.