Electrosteel case: NCLT reserves order on Vedanta eligibility

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Kolkata | Published: April 5, 2018 3:25:57 AM

The Kolkata bench of NCLT reserved its order on Renaissance Steel’s application opposing the committee of creditors’ decision (CoC) to select the proposal by Anil Agarwal-promoted Vedanta in the insolvency process for Electrosteel Steels

Electrosteel case,  NCLT, Vedanta, Renaissance SteelThe Kolkata bench of NCLT reserved its order on Renaissance Steel’s application opposing the committee of creditors’ decision (CoC) to select the proposal by Anil Agarwal-promoted Vedanta in the insolvency process for Electrosteel Steels

The Kolkata bench of the National Company Law Tribunal (NCLT) on Wednesday reserved its order on Renaissance Steel’s application opposing the committee of creditors’ decision (CoC) to select the proposal by Anil Agarwal-promoted Vedanta in the insolvency process for Electrosteel Steels, citing ineligibility of the metals and minerals major. Ratnanko Banerjee, counsel for Renaissance Steel, in his submission before the tribunal’s bench, said, “The CoC has not taken an independent decision on the eligibility issue, as directed by the tribunal. It has only supported the resolution professional’s decision on this matter. It is not an independent decision of CoC with reasons.” In his counter arguments, advocate Jishnu Saha, representing the CoC of the debt-laden company, said, “The RP has consulted with a reputed law firm on the eligibility issue, and then taken his decision on the eligibility of Vedanta to bid for Electrosteel. We (CoC) have not consulted any law firm in this matter. We are satisfied with the RP’s decision. We have no reason to disagree with Mr Dhaivat Anjaria the resolution professional (RP) on this issue.” “Renaissance’s offer is much inferior,” Saha added. Vedanta’s counsel SK Kapoor informed that the Anil Agarwal-promoted company had made an offer of Rs 5,320 crore for the beleaguered steel firm, while the liquidation value stands at Rs 2,899 crore. Lenders to Electrosteel selected Vedanta as the highest bidder for the company at a meeting held on March 29 in Kolkata.

Abhishek Dalmia-led Renaissance Steel also filed an application before the tribunal, alleging contempt of the tribunal’s order by Anjaria. On March 20, the NCLT had directed the RP to place all the objections of Renaissance Steel against Vedanta and Tata Steel before the CoC for an “independent consideration” of the committee. This was after Renaissance Steel had moved the tribunal asking it to prevent Anjaria from proceeding with further negotiations with Vedanta, the highest bidder, till the issue of eligibility of the Anil Agarwal-led company and Tata Steel was determined. After hearing the over two-hour-long arguments by all the concerned parties in this matter on Wednesday, the bench reserved its order. “We are going to re-look at whether the RP and the CoC’s view on the eligibility issue for Vedanta comply with the law under IBC,” Justice Jinan KR said. The bench on April 11 will hear Renaissance’s application on the RP’s alleged contempt of the tribunal. Banerjee alleged that despite the tribunal’s direction, Anjaria did not provide the Dalmia-led steel company all the required documents. Passing an order on March 20, the Kolkata bench of the NCLT had directed the RP to give a copy of the decision taken by the him in respect of eligibility of resolution applicants Tata Steel and Vedanta as per Section 29(A), with supporting reasons for taking the decisions to Renaissance. On April 2, the RP of Electrosteel Steels submitted Vedanta’s resolution plan before the Kolkata bench of the NCLT for its final disposal, even as rival bidder Renaissance Steel opposed the lenders’ decision to permit the Anil Agarwal-promoted company to participate in the insolvency process on the grounds that it was ineligible. While Renaissance’s objection is with specific reference to their bids for Electrosteel Steels, the final ruling on the eligibility of Vedanta and Tata Steel has wider ramifications, as the two companies have also bid for other assets under the insolvency process and their eligibility or ineligibility would impact all their bids.

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