Essar Steel bid: StanChart demands equal treatment for CoC members

During the hearing of Essar Steel’s insolvency case at the Ahmedabad bench of National Company Law Tribunal (NCLT), Standard Chartered Bank (SBC) counsel argued that SBC was discriminated against and not counted as a secure financial creditor and, as result of which, the bank was getting mere `60.71 crore against `3,487 crore, which is hardly 1.7 percent of total claim.

The counsel told NCLT on Tuesday that SBC too should be treated equally with other members of committee of creditors (CoC). He told the bench that the CoC members led by State Bank of India (SBI) were paid full in principal amount and 40% of interest accrued from the bid offered by ArcelorMittal in tune with Rs 42,000 crore. However, according to him, SBC was excluded from the CoC and not even counted as secured financial creditor.

It is worth mentioning that CoC didn’t declare SCB as secured financial creditor, saying that ESL was not a direct corporate debtor of SCB and the private sector bank also not offered any collateral.

“On October 22, 2018, a meeting of CoC was held to discuss resolution plan submitted by ArcelorMittal. The final plan was presented the next day on October 23, minutes before the voting on the plan initiated. Moreover, CoC appointed a four-member sub-committee to renegotiate the plan with ArcelorMittal and kept SCB in dark,” the counsel told.

ArcelorMittal’s resolution plan envisages an upfront payment of Rs 42,000 crore to lenders and an additional Rs 8,000 crore towards capital expenditure. Later, Standard Chartered Bank approached the bankruptcy court, challenging the resolution plan approved by the majority of financial lenders. The bank has more than 7.5 percent weight in the voting process and voted against ArcelorMittal’s resolution plan.

Essar Steel