The lenders of bankrupt Essar Steel on Wednesday told the Ahmedabad bench of the National Company Law Tribunal (NCLT) that the last-minute offer by the company’s promoters to pay Rs 54,389 crore should be dismissed as it is “not maintainable”. To support the contention, the Supreme Court’s October order in the matter was read out, which had stated that both ArcelorMittal and Numetal, who were in the race to acquire Essar Steel, would have to clear any outstanding within two weeks to become eligible to bid for the company. It was also pointed out that the proposal from Essar Steel promoters came only after the lenders picked up ArcelorMittal as the preferred bidder for the company on October 25.
The counsel for the committee of creditors (CoC) for Essar Steel, Ravi Kadam, also urged the tribunal to conduct day-to-day hearing on the matter. However, the tribunal deferred the matter for hearing to December 10 saying that the bench was not in full strength.
Only one judge was present, while the other was absent. On his part, the counsel for Essar Steel, Mihir Joshi said the decision of the CoC to accept the offer of ArcelorMittal was “unusual” and “in haste” when the promoters of Essar Steel were willing to pay Rs 54,389 crore. As is known, more than 90% of the CoC had voted in favour of the bid by Arcelor Mittal which has promised Rs 39,500 crore by way of cash upfront.
A day after it, 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. The package included an upfront cash payment of `47,507 crore to all creditors, including a payment of Rs 45,559 crore to the senior secured financial creditors.
Subsequently, Essar Steel Asia Holdings, which is the 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. In the meanwhile, a total of 31 operational creditors of Essar Steel moved the NCLT in five separate petitions urging that it direct the CoC to ensure full payment to them and take necessary steps to modify ArcelorMittal’s resolution plan for that. Alternatively, they urged the tribunal to direct the CoC to also consider the last minute offer of the Essar Steel promoters which promises to pay all creditors in full.