18 March 2019: In a big win for ArcelorMittal, National Company Law Appellate Tribunal (NCLAT) today gave a conditional approval to ArcelorMittal’s Rs 42,000 crore resolution plan for Essar Steel sale, subject to final order. However according to some reports, Essar may challenge the order in the Supreme Court.
“The resolution professional will be the chairperson of the monitoring committee and will act in accordance with law to ensure that the company is a going concern,” the tribunal said.
The appellate tribunal also said it will also look into the issue of discriminatory distribution of the funds between financial and operational creditors.
National Company Law Appellate Tribunal on Friday had refused to stay National Company Law Tribunal’s (NCLT) Ahmedabad bench order approving steel giant ArcelorMittal’s Rs 42,000 crore takeover bid for Essar Steel and sought a fresh plan for the distribution of bid amount between financial and operational creditors of the debt-laden firm.
NCLAT two-judge bench had earlier asked creditors to consider giving operational creditors 10 per cent of the total proceeds, up from 5 per cent considered in the agreed plan. The bench also asked lenders to consider giving Standard Chartered more of the dues than what is proposed now, suggesting a pro rata formula be applied for all financial creditors.
Four creditors with the largest exposures, namely Edelweiss ARC, State Bank of India, IDBI Bank and ICICI Bank, are part of the core committee that is taking the call on the behalf of lenders as the committee of creditors (CoC) has been technically dissolved after a decision to award the bid to ArcelorMittal was taken.
Essar Steel directors had challenged Ahmedabad-bench of NCLT nod to global steel giant ArcelorMittal’s bid for the debt-laden company on the plea that their offer of Rs 54,389-crore was superior as it clears 100 per cent outstanding of both financial and operational creditors.
Standard Chartered too moved the NCLAT against the plan as its counsel contended that the bank was being given only 1.7 per cent of its total dues from Essar Steel while other financial creditors, forming part of the CoC, were getting over 85 per cent of their dues.
ArcelorMittal’s Resolution Proposal involves financial creditors getting Rs 41,987 crore out of their total dues of Rs 49,395 crore. Operational creditors, under the plan, would get just Rs 214 crore against the outstanding of Rs 4,976 crore.
Accroding to ArcelorMittal plan, Standard Chartered will only get Rs 60 crore against its claims of Rs 3,187 crore from Essar Steel.
On Thursday, the appellate tribunal had told Essar Steel Asia Holdings (ESAH) that its Rs 54,389-crore resolution plan would only be considered only if the entity cleared the Essar’s entire bad debt of Rs 1.4 lakh crore.