The National Company Law Appellate Tribunal (NCLAT) on May 30 allowed Vedanta Ltd to make an upfront payment of Rs 5,320 crore to lenders for acquiring Electrosteel. A two-member bench also said this payment would be subject to the outcome of the petition filed by Renaissance Steel challenging Vedanta’s bid.
“During the pendency, the parties may act as far the approved resolution plan and the resolution applicant may deposit the upfront amount to Committee of Creditors subject to the order of the appeal,” said the NCLAT bench headed by Chairman Justice S J Mukhopadhaya.
The bench also clarified that if Renaissance Steel wins the case, then the Committee of Creditors (CoC) will have to return the money to Vedanta. The appellate tribunal also reserved its order over Renaissance Steel’s petition.
In a regulatory filing, Vedanta Ltd said NCLAT “has allowed Vedanta Limited to acquire Electrosteel Steels Limited (ESL) by depositing the upfront payment to the Committee of Creditors”. On May 17, NCLAT admitted the petition of Renaissance Steel challenging Vedanta’s bid for debt-ridden Electrosteel.
Renaissance Steel’s resolution application was rejected by the Committee of Creditors of Electrosteel Steels. On May 1, NCLAT had directed maintaining status quo in the case pertaining to the sale of the debt-laden firm to Vedanta Ltd.
Renaissance had submitted before the NCLAT that Vedanta is not eligible to bid for Electrosteel under section 29 A of the Insolvency and Bankruptcy Code as one of Vedanta’s affiliates in Zambia, a unit of its UK-based parent Vedanta Resources Plc, had been found guilty of criminal misconduct.
Electrosteel owes lenders more than Rs 13,000 crore, of which about Rs 5,000 crore is to State Bank of India alone. Last month, the Kolkata bench of the National Company Law Tribunal (NCLT) had cleared Vedanta’s Rs 5,320-crore resolution plan for Electrosteel, rejecting objections by Renaissance Steel.