The National Company Law Tribunal (NCLT) on Wednesday said it would hear all the pleas filed by the creditors’ committee and aggrieved parties in the Essar Steel insolvency case on December 10.
Ravi Kadam, arguing on behalf of the committee of creditors (CoC), said that the CoC has already approved the sale of Essar Steel to ArcelorMittal-Nippon Steel.
The joint venture between ArcelorMittal SA, the world’s largest steelmaker, and Japan’s Nippon Steel & Sumitomo Metal Corp have agreed to fund deal through the equity and debt route. The resolution plan includes an upfront payment of Rs 42,000 crore and another Rs 8,000 crore into Essar Steel to support operational improvement.
But less than 24 hours after the CoC voted in favour of ArcelorMittal’s offer, the billionaire Ruia brothers, owners of Essar Steel India, said the company’s board and shareholders have offered to pay Rs 54,000 crore to creditors to settle their claims, making a last-ditch attempt to retain it and allowing it to exit from a bankruptcy process.
Kadam argued that the unofficial offer made by the Ruias to withdraw Essar Steel from insolvency proceedings was not maintainable. Therefore, said Kadam, the Essar Steel Asia Holdings Ltd (ESAHL) petition in the matter must be dismissed.
Essar Steel lenders have so far ignored the settlement proposal offered by Essar Steel Asia Holding Ltd (ESAHL) -- the promoter of Essar Steel -- to pay Rs 54,389 crore to all clear all dues of their flagship company, and withdraw it from insolvency proceedings.
Mihir Joshi, arguing on behalf of ESAHL, countered Kadam saying that the ArcelorMittal’s offer for the company was not reflective of the true value of Essar Steel.
Joshi argued that Essar Steel always had the right to settle dues, even before the company was pushed into the bankruptcy court by lenders, and the mere initiation of insolvency proceedings does not mean that the negotiation process has to stop.
Joshi further said that Ruias offer to settle the debt, which was sent to the lenders in a letter on October 25, never got a response, and the CoC was acting in haste by taking up the ArcelorMittal offer when the Ruias have offered a higher sum.
The operational creditors plea was not heard by the court today. On account of the full bench not being present, the case has now been adjourned until December 10.
Essar Steel is one of the several companies that are among India's biggest debt defaulters that were pushed into the National Company Law Appellate Tribunal (NCLAT), a bankruptcy court, last year after an order by the Reserve Bank of India that was aimed at clearing record bad loans at the country's banks.
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