14 March 2019: The National Company Law Appellate Tribunal (NCLAT) on Thursday asked ArcelorMittal to consider revising its Rs 42,000 crore bid for Essar Steel India Limited (ESIL), while also observing that a window of opportunity could be provided to the promoters of Essar if they cleared all the debt related to Essar group. It gave the latter one week time to consider the same.
The Essar promoters, NCLAT Chairperson Justice S J Mukhopadhaya observed, will have to clear all the debts related to the group, according to a Supreme Court judgement, to become eligible to bid for Essar Steel again. The NCLAT will next hear the matter on Friday.
On Thursday, the appellate tribunal was hearing a petition moved by promoters of Essar Steel India against the National Company Law Tribunal (NCLT) Ahmedabad’s judgment approving ArcelorMittal’s resolution plan for debt-laden Essar Steel. Three directors of Essar Steel had mentioned the issue on Monday before a two-judge Bench headed by Chairman Justice S J Mukhopadhaya, following which the matter was listed for hearing on Thursday.
The three directors of Essar Steel are Prashant Ruia, Dilip Oommen, and Rajiv Bhatnagar. Apart from the directors, dissenting financial creditor Standard Chartered Bank (StanChart) had also approached the NCLAT on Monday. During the hearing on Thursday, Standard Chartered Bank said that it was challenging the entire corporate insolvency resolution process of Essar Steel as it was flawed.
StanChart had alleged it was being discriminated against by the committee of creditors (CoC) of Essar Steel as it had been allotted a very less value against its claim. The allegation was, however, rejected by the CoC, which had told NCLT-Ahmedabad that the bank was, in fact, getting two times its share.
ArcelorMittal’s bid for the company includes an upfront payment of Rs 42,000 crore towards the debt resolution of Essar Steel, with an additional Rs 8,000 crore of capital infusion into the company to support operational improvement, increase production levels, and deliver enhanced levels of profitability. In October 2018, the CoC of Essar Steel had voted to approve ArcelorMittal’s plan and a letter of intent was issued.