The National Company Law Appellate Tribunal (NCLAT) on Tuesday granted seven more days to NCLT to decide over the Rs 42,000 crore resolution plan submitted by ArcelorMittal for Essar Steel.
A two member bench headed by Justice SJ Mukhopadhaya has directed the Ahmedabad bench of the National Company Law Tribunal (NCLT) to decide over the matter by February 19. During the hearing, NCLAT was informed that Ahmedabad bench has completed hearing on operational creditors plea and is scheduled to hear plea of suspended Board of Directors (Promotors) of Essar Steel later (in the day Tuesday).
Earlier on February 4, the NCLAT had asked NCLT Ahmedabad bench to decide by February 11, failing to which it would call records and pass an order. The NCLAT direction came while hearing an application filed by ArcelorMittal, whose Rs 42,000 crore takeover proposal of the indebted steel-maker has been approved by the committee of creditors (CoC) and is pending before the NCLT for approval.
Earlier, on January 29, the NCLT Ahmedabad bench had rejected the settlement offer by Essar Steel’s promoters, the Ruia family, paving the way for the acceptance of ArcelorMittal’s bid for the takeover of the debt-laden company. The Committee of Creditors had earlier selected the Rs 42,202 crore bid for Essar Steel put in by ArcelorMittal, but Essar later submitted a bid which is Rs 12,000 crore more than the Mittals’s offer. The NCLT decision on January 29 followed the order of the NCLAT the previous week asking the NCLT to pass an order by January 31 on the resolution of the loans. The Ruias had moved the NCLAT against the January order of the NCLT which had rejected its plea for placing an offer for resolution of the company.
With NCLAT push, banks may recover record amount
The battle for Essar Steel with an annual capacity of 10 million metric tons has been one of the most hotly contested under the insolvency resolution process. Resolution of the debt-laden Essar Steel was among the first large cases to be referred under the Insolvency and Bankruptcy Code (IBC), but has been delayed beyond 270-day permitted under the law. With the NCLAT trying to push for speedy resolution, this case could see finality by the end of this month, leading to record recovery for banks in this case.
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). On October 26, a day after the Ruias — the original promoters of Essar Steel India Ltd — put in the last-minute bid to retain the company within their stable, ArcelorMittal said lenders of Essar Steel had approved a joint offer by ArcelorMittal SA and Japan’s Nippon Steel & Sumitomo Metal Corp as the final bid for the debt-laden company.
The Ruia offer was Rs 12,188 crore more than the Rs 42,202 crore bid put in by ArcelorMittal, which has been selected as the preferred bidder by the lenders in October as part of the corporate insolvency resolution process under the Insolvency and Bankruptcy Code. However, the Ruias did not reveal the source of funds. Lenders had then opposed the Ruias’ bid saying it was not according to the law. The battle for Essar Steel with an annual capacity of 10 million metric tonnes has been one of the most hotly contested under the insolvency resolution process. On January 7, NCLT’s Ahmedabad bench reserved judgment on the maintainability of Essar Steel promoters’ last-minute bid to regain control of the 10 mtpa steel firm.