NCLAT Approves ArcelorMittal's Bid for Essar Steel

Moneylife Digital Team 04 July 2019

Economy & Nation

The National Company Law Appellate Tribunal (NCLAT) on Thursday accepted ArcelorMittal's bid for insolvent Essar Steel while rejecting objection raised by Prashant Ruia saying that the issue of the eligibility of the Laxmi Mittal-led company has already been decided by the Supreme Court.

The Tribunal said, the committee of creditors (CoC) has no role in distribution of the Rs42,000 crore being paid by ArcelorMittal and the CoC can only look at viability of the resolution plan.

The bench headed by Justice SJ Mukhopadhyay and Justice Bansi Lal Bhat, while upholding that there could be no classes of financial creditors on the basis of being secured and unsecured, directed that all financial creditors having a claim amount of over Rs1 crore would be entitled to 60.7% of their admitted claim.

The NCLAT also awarded about 60% of the admitted claim to certain operational creditors having claims of more than Rs1 crore.

Commenting on the judgement, an Essar spokesperson said: "It appears that new facts regarding ineligibility under Section 29A (of the Insolvency and Bankruptcy Code), which emerged only after the previous judgement of the Supreme Court, have not been given due consideration. We are awaiting the detailed order and will decide our course of action thereafter."

Sources, however, said that Ruia may again move to the Supreme Court against the approval to ArcelorMittal's bid.

According to its resolution plan for Essar Steel, ArcelorMittal would provide Rs41,987 crore to the financial creditors out of their total dues of Rs49,395 crore. Operational creditors, under the plan, would get Rs214 crore against the outstanding Rs4,976 crore.

Earlier in March, the appellate tribunal had approved ArcelorMittal's bid of Rs42,000 crore and dismissed Essar promoters Ruias' plea against the approval of the NCLT's Ahmedabad bench to the bid.

Essar Steel owns a 10-million-tonne steel mill in Hazira, Gujarat. It was among the first 12 cases selected by the Reserve Bank of India to be resolved under the Insolvency and Bankruptcy Code.

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