9 July 2019: The Mumbai bankruptcy tribunal NCLT Tuesday directed the resolution professional of Ruchi Soya to find out whether the appellate tribunal NCLAT’s last week’s order on Essar Steel- ArcelorMittal matter would have any impact on their case.
An NCLT bench of VP Singh and Ravikumar Duraisamy wanted to know what will be the impact of the National Company Law Appellate Tribunal (NCLAT) order passed last week on ArcelorMittal matter which ordered almost equal treatment of operational and financial creditors, leading to a much higher payout to operational creditors, and forcing much higher haircut on banks.
The tribunal observed that the NCLAT order has changed the entire outcome for all stakeholders and is like a formula with clear-cut directions on the distribution of the proceeds should be carried out.
The NCLAT on July 4, gave operational creditors equal status as lenders in the distribution of the ArcelorMittal’s Rs 42,000 crore bid to take over Essar Steel.
The move is likely to delay the award of the sole bid for the edible oils company to Patanjali.
Essar Steel was auctioned under the new bankruptcy code to recover Rs 54,547 crore of unpaid dues of financial lenders and operational creditors.
The NCLAT’s revised order said financial creditors would get only 60.7 percent of their admitted claims of Rs 49,473 crore, which in the present case means a little over Rs 30,000 crore. The rest would go to operational creditors, who were to only around 3 percent in the earlier order.
Unhappy over lower payout, the lenders led by State Bank are planning to move the Supreme Court to challenge the NCLAT order, as the IBC laws do not treat operational creditors and financial creditors equally.
Similarly, the Ruia brothers, the original promoters of Essar Steel are also planning to challenge the winning bid of Arcelor-Mittal claiming the bidder is ineligible as its two subsidiaries were defaulters.
Reserving an order on Ruchi Soya, the tribunal said, the resolution plan is required to be further discussed and adjourned the matter for hearing on July 18.
NCLT, had on May 10, reserved its order on the Rs 4,350-crore offer by Haridwar-headquartered Patanjali to take over the crippled edible oil maker Ruchi Soya.
Meanwhile, the RP sought an interim order to maintain status quo on Sebi’s show cause notice to Ruchi Soya. The counsel alleged that even though the Sebi is aware of the moratorium, still they continue with the hearing on the show cause notice.
Admitting the plea, the tribunal asked Sebi to reply within seven days.
In December 2017, NCLT had referred Ruchi Soya for insolvency on applications moved by Standard Chartered Bank and DBS Bank and appointed Shailendra Ajmera as the RP.
Patanjali after losing the bid later increased its bid value by around Rs 140 crore to Rs 4,350 crore along with a capital infusion of Rs 1,700 crore.
Ruchi Soya owes over Rs 9,345 crore to financial creditors led by State Bank, which has an exposure of Rs 1,800 crore, followed by Central Bank at Rs 816 crore, PNB at Rs 743 crore and StanChart at Rs 608 crore.