Ending months of uncertainty, the Ahmedabad bench of the National Company Law Tribunal (NCLT) on Friday approved ArcelorMittal’s Rs 42,000 crore resolution plan for the debt-laden Essar Steel.
The takeover proposal of ArcelorMittal — controlled by LN Mittal — for the steel company was approved by the Essar Steel’s Committee of Creditors in October 2018 and it was pending before the NCLT for the final approval since then. NCLT said it cannot impose judicial view over banks’ wisdom. However, asking the Committee of Creditors (CoC) to reconsider distribution of dues, NCLT has suggested the lenders to give 15 per cent of total offer to operational creditors.
Reacting to the NCLT judgement, an Essar spokeperson said, “We continue to believe that our settlement proposal of Rs 54,389 crore is the most compelling one available to Essar Steel creditors and fulfills the IBC’s declared overriding objective of value maximisation, which has been established time and again by courts at all levels. We are also confident of the legal validity of our said offer made under Section 12A, which provides for the withdrawal from the IBC process by making full payment to the creditors.”
“We are awaiting a copy of the NCLT order, and will take a call on next steps after examining the same,” Essar said. Essar Steel which owes Rs 54,389 crore to a consortium of banks was in the first list of 12 defaulters prepared by the Reserve Bank of India for resolution under the Insolvency and Bankruptcy Code (IBC).
“We welcome today’s pronouncement by the NCLT Ahmedabad. While we will need to review the full written order once it becomes available, we hope to complete the transaction as soon as possible,” ArcelorMittal said. The National Company Law Appellate Tribunal (NCLAT) had last month directed the NCLT Ahmedabad bench to take a decision on the Rs 42,000-crore resolution plan submitted by ArcelorMittal for debt-ridden Essar Steel by March 8. NCLAT said if the Ahmedabad bench of NCLT fails to pass an order by this deadline, it would call records and pass an order.