In a big win for global steel ArcelorMittal, the National Company Law Appellate Tribunal (NCLAT) on Monday directed the National Company Law Tribunal (NCLT) to implement the company's Rs 42,000 takeover bid for Essar Steel, saying it will be subject to its final order in the appeal filed by the promoters.
The appellate tribunal has also asked ArcelorMittal to deposit the amount with the Committee of Creditors (CoC). The next hearing in the Essar Steel case is scheduled on March 27.
A two-member bench headed by Justice S J Mukhopadhaya said there is no stay on the resolution professional of Essar Steel to disburse the funds among financial and operational creditors of the company.
"The resolution professional will be the chairperson of the monitoring committee and will act in accordance with law to ensure that the company is a going concern," the tribunal said.
The appellate tribunal also said it will also look into the issue of discriminatory distribution of the funds between financial and operational creditors.
It has also asked the Insolvency & Bankruptcy Board of India (IBBI) to submit a ratio of distribution of funds between financial and operational creditors.
The NCLAT on Friday refused to stay a bankruptcy court order approving ArcelorMittal's takeover bid for Essar Steel and sought a fresh plan for the distribution of bid amount between financial and operational creditors of the debt-laden firm.
Essar Steel directors had challenged Ahmedabad-bench of National Company Law Tribunal's (NCLT) nod to global steel giant ArcelorMittal SA's bid for the debt-laden company on the plea that their offer of Rs 54,389-crore was superior as it clears 100 percent outstanding of both financial and operational creditors.
Standard Chartered too moved the NCLAT against the plan as its counsel contended that the bank was being given only 1.7 percent of its total dues from Essar Steel while other financial creditors, forming part of the CoC, were getting over 85 percent of their dues.
It also asked State Bank of India-led CoC to bring a fresh distribution plan at the next date of hearing, saying "there cannot be any discrimination... all are equal".
ArcelorMittal's resolution proposal provides financial creditors Rs 41,987 crore out of their total dues of Rs 49,395 crore. Operational creditors, under the plan, would get just Rs 214 crore against the outstanding of Rs 4,976 crore. If the ArcelorMittal plan is implemented, Standard Chartered will only get Rs 60 crore against its claims of Rs 3,187 crore from Essar Steel.
With inputs from agencies.