ArcelorMittal got a major boost on Friday in its bid to acquire bankrupt Essar Steel, with the National Company Law Tribunal approving the Rs 42,000-crore winning bid after months and months of hearings, counter-hearings and petitions.
With the NCLT verdict, ArcelorMittal’s wait to take the deal ahead seems to have come to an end, provided there is no new ground for an appeal by those opposing the verdict. “It’s a big boost for ArcelorMittal. Now the letter of intent will be drafted and the Committee of Creditors will go ahead to close the deal,” Nilang Desai, Partner, AZB & Partners told Financial Express Online.
Lakshmi Niwas Mittal’s ArcelorMittal, which has been engaged in a drawn-out attempt to acquire Essar Steel since 2017, had made a winning bid of Rs 42,000-crore. The case dragged for 583 days compared with the 270-day resolution period prescribed in the insolvency code.
However, ArcelorMittal may yet have to wait a little more to gain control of Essar Steel. “Of course, there is still room open for challenge at NCLAT level and the Supreme Court,” Nilang Desai said, adding that if a competitive bidder or any aggrieved creditor approach authority with a new ground to appeal, then the NCLAT will have to hear them out.
However, he also said that if they don’t have a new ground, “then there is no appeal”.
In the order passed today, the NCLT bench asked Essar Steel’s Committee of Creditors (CoC) to reconsider distribution pattern of dues and suggested lenders to give 15 per cent of total offer to the operational creditors, the report also said. “It is up for the lenders to decide, up to their senses of equity and their sense of fairness about pot of cash they want to part with,” Suharsh Sinha, Senior Associate, AZB Partners, told CNBC TV18.
Earlier, it was reported that the National Company Appellate Law Tribunal had decided take the hearing upon itself from 14 March onward, if the NCLT did not come up with its final verdict by today. “Now, there is no need for NCLAT to hear the matter,” Nilang Desai said.
ArcelorMittal will have to rely on written order to decide on payment sharing-plan for creditors, CNBC TV18 reported citing ArcelorMittal lawyer Ruby Ahuja. The company will decide on next plan of action once written order comes in, she added.
The Essar Steel case is one of the 12 large cases admitted early on under the newly formed Insolvency and Bankruptcy Code.