Essar Resolution: NCLAT asks NCLT to pass order by January 31

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Published: January 24, 2019 1:55:52 AM

The National Company Law Appellate Tribunal (NCLAT) on Wednesday asked the Ahmedabad bench of the National Company Law Tribunal (NCLT) to pass an order by January 31 on the resolution of the debt-ridden Essar Steel.

Essar Resolution, Essar Resolution NEWS, Essar Resolution NCLT,Essar Resolution NCLATEssar Resolution: NCLAT asks NCLT to pass order by January 31

The National Company Law Appellate Tribunal (NCLAT) on Wednesday asked the Ahmedabad bench of the National Company Law Tribunal (NCLT) to pass an order by January 31 on the resolution of the debt-ridden Essar Steel.

More than 500 days have gone by since the petition against Essar Steel was admitted by the NCLT, Ahmedabad, on August 2, 2017.

A two-member bench of NCLAT, headed by Justice SJ Mukhopadhaya, said if the NCLT bench failed to pass an order by January 31, it would then call for the matter and pass an order accordingly on the next date of hearing, slated on February 4.

“We allow designated authority (NCLT) to pass appropriate orders by next date, failing which this appellate tribunal will decide,” said NCLAT. 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 company.

The judgment is expected by January 31.

The NCLAT on Wednesday was hearing an application filed by ArcelorMittal, which was chosen as the preferred bidder by lenders to gain control of the debt-laden firm, for an early disposal of the matter. The application was also supported by the CoC. The Committee of Creditors (CoC) also sought further direction from the NCLAT on its January 3 order that asked the Ahmedabad bench to dispose of the Essar Steel resolution matter on an early date, as per the order passed by the Supreme Court in this regard.

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On October 4, 2018, the Supreme Court had asked both resolution applicants — Russia’s VTB bank-backed Numetal and ArcelorMittal to clear their defaults of their related corporate debtor to be eligible for bidding. While ArcelorMittal has cleared its stains by paying of dues in the two companies it had majority shareholding, Numetal gave up.

The CoC on October 25 last year voted in favour of ArcelorMittal’s offer of upfront payment of Rs 42,000 crore to the lenders and an additional Rs 8,000 crore towards capital expenditure. A day after it, the promoters of Essar Steel had offered to pay Rs 54,389 crore towards a full settlement of the entire admitted claims of the financial creditors, operational creditors, and workmen and employees of Essar Steel.

Subsequently, Essar Steel Asia Holdings, which is a holding company of Essar Steel, filed a caveat in the NCLT that it be allowed to plead its case before any orders are passed in the matter.

Essar Steel owes over Rs 49,000 crore to over two dozen banks led by the State Bank of India. Peeved with the delay in the resolution process, SBI has put on sale its stressed exposure to Essar Steel worth Rs 15,431 crore, inviting bids at a reserve price of Rs 9,588 crore.

Meanwhile, in a statement to media, ArcelorMittal said, “In the case of Essar Steel, opportunities have been provided to bidders for nearly a year to first be eligible and second, to make a compelling offer. ArcelorMittal has followed the process from the start. We fully expect the process to continue to be implemented correctly and as per the law and that statements attempting to convince otherwise not be given any credibility.”

Essar Steel said in a statement, “The proposal made by Essar Steel shareholders provides for payment of a total of Rs 54,389 crore to various creditors, which exceeds the resolution plan currently approved by the creditors by more than Rs 12,000 crore. This proposal has been submitted under the recently introduced Section 12A of the IBC. Under the proposal made by the shareholders, all classes of creditors would receive full recovery of their claims.”

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