ArcelorMittal, whose Rs 42,000-crore offer to take over the bankrupt Essar Steel was accepted by the committee of creditors, Monday told NCLT that there is no right to redemption under the bankruptcy laws as being sought by Essar Steel Asia Holdings.
The Ahmedabad bench of the NCLT Monday reserved its verdict on the maintainability of the bid by Essar Steel Asia Holdings to retake the management of the crippled company. The NCLT bench comprising BP Chaturvedi and Manorama Kumari said they will pass an order on the plea by January 31.
ArcelorMittal, whose Rs 42,000-crore offer to take over the bankrupt Essar Steel was accepted by the committee of creditors, Monday told NCLT that there is no right to redemption under the bankruptcy laws as being sought by Essar Steel Asia Holdings. It said as per section 12A of the IBC Act only resolution professional has right to file such an application after getting the approval of 90 percent of the lenders.
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In their submission, the lenders requested that the matter be decided expeditiously in the interest of all the parties involved. Essar Steel Asia Holdings told the bench that lenders not considering its debt settlement proposal, which was higher than its rival offer, is surprising. Essar Steel Asia had proposed to the lenders led by State Bank of India, to pay an upfront Rs 54,389 crore to retake the management, which “ensures full repayment to all the creditors, including operational creditors.”
ArcelorMittal has opposed this claiming that it was against the Supreme Court order as well as the provisions of the bankruptcy laws. Essar Steel, which runs a 10-million-tonne steel mill in Gujarat, owes over Rs 49,000 crore to over two dozen banks led by the State Bank and has been under the bankruptcy proceedings since June 2017.
As per ArcelorMittal’s resolution plan, Rs 42,000 crore will be paid to the secured lenders, while an additional Rs 8,000 crore will be pumped in as working capital. The NCLT is also hearing petitions filed by close to 30 operational creditors of Essar Steel seeking settlement of their dues from ArcelorMittal. These operational creditors have moved the NCLT against the resolution plan offered by the world’s largest alloy maker ArcelorMittal as it denies settlement to operational creditors with over Rs 1 crore dues.