NEW DELHI: The Ahmedabad bench of the National Company Law Tribunal (NCLT) on Friday approved AreclorMittal’s Rs 45,000 crore resolution plan for the insolvent Essar Steel.
The committee of creditors of bankrupt Essar Steel had chosen ArcelorMittal as the highest bidder and submitted the Rs42,000-crore plan of the world’s largest steel maker before the NCLT bencha at Ahmedabad for approval.
This was ArcelorMittal’s second bid for Essar Steel. While ArcelorMittal got conditional approval in September 2018, Numetal (a consortium led by Russia’s VTB Bank)’s bid filed in the second round on 29th March last year was found eligible as by then it had restructured its shareholding composition by removing the stake of Essar Steel promoter’s son.
In January this year, the NCLT had rejected debt settlement proposal worth Rs54,389 crore submitted by Essar Steel Asia Holding.
After this, promoters of Essar as well as the company’s former managing director Dilip Oommen and project directo Rajiv Kumar Bhatnagar moved to NCLAT (National Company Law Appellate Tribunal). In its order, the NCLAT directed Ahmedabad bench of NCLT to expeditiously take a final decision in the Essar Steel insolvency case, where ArcelorMittal emerged as the highest bidder.
Seeking a stay on the NCLAT order, operational creditors approached the apex court. The plea sought setting aside of the orders as it claims them to be contrary to the settled legal propositions and against the principles of natural justice.
In its order, the Supreme Court reportedly stated that Essar promoters are acting through operational creditors, people and proxies to delay the process and it has been 571 days since the inception of the insolvency proceedings.
Essar’s repayment offer came from a subsidiary of Essar Global after the lenders had already accepted a bid of Rs42,000 crore from the LN Mittal group under the IBC (Insolvency and Bankruptcy Code) process, that too after forcing the group to make several other repayments as a condition to the bid. But Essar appears to have found a way to stymie the IBC process at the last minute, again calling into question the bankruptcy process.
On 7th January, Essar Global Fund Ltd, the holding company for the Essar group of companies, reportedly repaid a debt of Rs12,000 crore to its various Indian and foreign lenders. This is in addition to the Rs30,000 crore that it had repaid in August 2017 to various lenders from the proceeds of the sale of Essar Oil. This includes payments of Rs6,300 crore to ICICI Bank, Axis Bank and Standard Chartered Bank, to extinguish its borrowing from them.
The first bid of both Numetal and ArcelorMittal were rejected by the CoC, the lenders of Essar Steel, as they violated Section 29A of the Insolvency and Bankruptcy Code (IBC), which disqualifies a promoter of NPA from submitting a resolution plan.
ArcelorMittal was asked to clear its dues of about Rs7,000 crore related to Uttam Galva and KSS Petron, of which it was a promoter when these turned non-performing assets (NPA), in three working days that end on 11 September 2019.
Last month there were rumours alleged discussion between Vedanta Ltd and JSW Steel Ltd for a possible last minute bid for Essar Steel. According to reports, Sajjan Jindal’s JSW Steel was believed to be in talks with Anil Agarwal’s Vedanta to mount a late bid for Essar Steel.
However, in a regulatory filing, Vedanta clarified that such news reports were speculative and baseless.
Source: IANS