Essar Steel case: Rs 2,500 crore in Arcelor’s bid for working capital: CoC to NCLAT

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Published: May 17, 2019 12:17:31 AM

Lenders to the debt-ridden Essar Steel on Thursday told the National Company Law Appellate Tribunal (NCLAT) that ArcelorMittal’s Rs 42,000-crore resolution plan includes Rs 2,500 crore as working capital.

The Rs 2,500 crore is the minimum guarantee to the creditors of Essar Steel irrespective of whether the company is profit- or loss-making during the pendency of the insolvency resolution processThe Rs 2,500 crore is the minimum guarantee to the creditors of Essar Steel irrespective of whether the company is profit- or loss-making during the pendency of the insolvency resolution process

Lenders to the debt-ridden Essar Steel on Thursday told the National Company Law Appellate Tribunal (NCLAT) that ArcelorMittal’s Rs 42,000-crore resolution plan includes Rs 2,500 crore as working capital.

“It is a fact that in the Supreme Court offer was made for `42,000 crore. But in the final judgment, the Supreme Court only referred to the previous offer of `35,000 crore. Ultimately, after a lot of discussion, it was raised to `39,500 crore. Then there was a discussion on working capital. We said please guarantee `2,500 crore. So, the total upfront payment is `42,000 crore,” senior advocate Gopal Subramanium, representing the committee of creditors (CoC), said.

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The `2,500 crore is the minimum guarantee to the creditors of Essar Steel irrespective of whether the company is profit- or loss-making during the pendency of the insolvency resolution process.

Subramanium said ArcelorMittal’s resolution plan was meant for Essar Steel only and does not include Orissa Slurry Pipeline Infrastructure (OSPIL), as was alleged by Standard Chartered Bank.

Over claims by Standard Chartered Bank, the CoC accepts the foreign bank’s stature as a secured financial creditor, but said it could not be treated in the same bracket as its money came for a step-down subsidiary. Standard Chartered Bank has given a bank guarantee of `3,187 crore.

“We agree that Standard Chartered is a secured creditor. Their money was transferred from India to a Mauritian entity for a US-based step down unit,” he said, adding “in normal circumstances, we would have given money to them”.

A two-member NCLAT bench headed by chairman justice SJ Mukhopadhaya also directed the CoC to submit a distribution chart of the money coming from ArcelorMittal. The bench will hear ArcelorMittal’s response on different allegation on the next date of hearing scheduled on May 20.

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