Ray of hope for Ruias in Essar Steel bankruptcy; NCLAT says will make room if they pay dues

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New Delhi | Updated: March 15, 2019 7:19:45 AM

Promoters owe lenders around Rs 85,000 crore at the group level.

ArcelorMittal, essar steel, ncltArcelorMittal has cleared its liabilities of Rs 7,000 crore towards Uttam Galva and KSS Petron.

The National Company Law Appellate Tribunal (NCLAT) on Thursday directed promoters of Essar Steel to pay their dues, as per the orders of the Supreme Court, saying it would then “make room for” them. The Ruias owe lenders an estimated Rs 80,000-85,000 crore at the group level, their counsel told the NCLAT bench. The Ruias had made an offer to pay Rs 54,389 crore but their offer came after the creditors had approved ArcelorMittal’s resolution proposal.

The Ruias had approached the Ahmedabad bench of the NCLT ( National Company Law Tribunal) but the tribunal in its March 8 order had approved ArcelorMittal’s Rs 42,000-crore bid for Essar Steel.

Subsequently, the Ruias moved the appellate tribunal.

“We may consider, if you pay the dues as per the Supreme Court order. Think over it. Think over Rs 80,000 crore money, we will make room for you,” the two-member bench headed by justice SJ Mukhopadhyay said.
Essar Steel’s counsel sought a week to respond.

The NCLAT also enquired why ArcelorMittal could not sweeten its offer, wondering, “If it (Essar Steel) is worth of about Rs 54,000 crore, why are you paying Rs 42,000 crore?” Abhishek Manu Singhvi, appearing for ArcelorMittal, said he would respond on the point at a later date.

Meanwhile, Standard Chartered Bank on Thursday objected to ArcelorMittal’s winning bid in the NCLAT and termed it as “discriminatory.” “The approval is not just discriminatory against us, it is against the law also,” senior counsel Kapil Sibal, appearing on behalf of the lender, said.

Standard Chartered is concerned as it has an exposure of Rs 3,487 crore to Essar Steel but is being able to recover a small fraction of this.

On October 4, 2018, the Supreme Court had asked the two contenders for Essar Steel, ArcelorMittal and Numetal, an entity in which Essar Steel promoter Ravi Ruia’s son Rewant had a stake, to clear the “taint of disqualification” by paying off debts of the companies they were associated with. ArcelorMittal has since cleared its liabilities of Rs 7,000 crore towards Uttam Galva and KSS Petron.

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On October 25, 2018, a day after ArcelorMittal’s bid was approved by over 90% of the lenders, the promoters of Essar Steel offered to pay Rs 54,000 crore to clear their dues into both the financial and operational creditors. On January 29, 2019, the Ahmedabad bench of the NCLT, rejected the maintainability of their last-minute offer under section 12 (A) of the Insolvency and Bankruptcy Code (IBC).

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