Speed up Essar Steel insolvency case, rules NCLAT
Ahmedabad/Mumbai The National Company Law Appellate Tribunal (NCLAT) has directed the Ahmedabad bench of the National Company Law Tribunal (NCLT) to expedite the insolvency case filed against the Essar Steel Ltd.
On Thursday, while hearing the petition filed by the committee of creditors (CoC) of Essar Steel through State Bank of India against the resolution professional Satish Kumar Gupta and others, the appellate tribunal had directed the Ahmedabad bench of NCLT to expeditiously take a final decision, said two persons privy to the development.
“Senior advocate Gopal Subramaniam, who was appearing for the lenders of the Essar Steel, argued that while the statutory requirement is to finish the insolvency case within 270 days, this case has already passed 500 days,” said the first person quoted above.
“The lawyers are seeking to direct the appellate tribunal to direct the NCLT to pass an order under Section 31 of the Insolvency and Bankruptcy Code (IBC),” said the other person.
The financial creditors of the Essar Steel had voted in favour of the resolution plan of ArcelorMittal with over 92% vote on October 25. However, subsequently, Essar Steel shareholders proposed payment in full to all its lenders, including operational lenders.
Later, Standard Chartered Bank had also approached the dedicated bankruptcy court as a dissenting financial creditor to challenge the resolution plan approved by the majority of the financial lenders. Standard Chartered has more than 7.5% weight in the voting process and has voted against the resolution plan of ArcelorMittal.
Essar Steel owes over ₹49,000 crore to over two dozen banks led by State Bank of India. The company runs a 10 million tonne steel mill at Hazira in Gujarat that comprises ore beneficiation, pellet making, iron making, steel making and downstream facilities.
A division bench of the NCLAT presided by Justice S.J. Mukhopadhaya and Justice Bansi Lal Bhat in its oral order directed the tribunal to take an early decision in the matter according to the order passed by the Supreme Court in this regard.
An ArcelorMitttal representative in response to an email query said, “The company has no comment on this.”
Email queries to resolution professional Gupta of Alvarez & Marshal Pvt. Ltd., Essar Group did not elicit any response.
The matter is listed at NCLT, Ahmedabad, for further hearing on January 7. In November 2018, about 30 operational creditors and Essar Steel shareholders challenged the CoC and the resolution professional’s decision to accept ArcelorMittal’s resolution plan.
Essar Steel Asia Holdings Limited, which holds 72% stake in Essar Steel, has submitted a proposal before NCLT Ahmedabad for settlement of the entire debt for an amount of approximately ₹54,389 crore.
In October, the Supreme Court allowed ArcelorMittal and Numetal to bid for Essar Steel provided they paid off dues of defaulters connected to them within two weeks. The CoC, on October 25, voted in favour of handing over the debt-laden company to ArcelorMittal after it cleared pending dues of Uttam Galva and KSS Petron. ArcelorMittal’s resolution plan envisages an upfront payment of ₹42,000 crore to lenders and an additional ₹8,000 crore towards capital expenditure.
At NCLT, Ahmedabad, the CoC and RP have opposed ESAHL’s debt recast proposal claiming that it was against the apex court’s order and was also against the insolvency law and that such proposals by Essar Steel shareholders had been rejected by them in the past.
ESAHL’s lawyers have told the bankruptcy court that their proposal should be considered as it was higher than ArcelorMittal’s offer.