NCLAT Approves ArcelorMittal's Bid for Essar Steel
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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    Reliance Home Finance's Rs400 NCD rated at 'D' or Default by CARE Ratings
    CARE Ratings has assigned a 'D' or default rating to Reliance Home Finance Ltd (RHFL)'s non-convertible debentures (NCDs) worth Rs400 crore due to liquidity crunch faced by the company and its parent, Reliance Capital Ltd (RCL).
     
    "The rating revision takes into account the recent instance of rescheduling of non-convertible debenture by the company to address the timing mismatches of receipts. This indicates that the company did not have funds to meet their debt obligation on the given date. The liquidity profile of the group continues to be under stress on account of delay in raising funds from the asset monetization plan and impending debt payments," the ratings agency said in a statement.
     
     
    The debenture trustee for NCDs issued by RHFL has informed CARE via an email that the company had due date for redemption of NCD for Rs400 crore on 28 June 2019 which has been rescheduled and now the due date is 31 October 2019. Further, the company has been delaying in servicing of bank facilities which has been already downgraded to 'D' by the ratings agency.
     
    CARE Ratings says, it had factored in linkages between RHFL and its parent RCL which are in the form of RCL’s demonstrated track record of support to the subsidiary and strategic importance of the subsidiary to its parent along with sharing of the brand name. 
     
    It says, "The moderation in RCL’s profile has weakened these linkages as the parent may not be in a position to extend adequate support to its subsidiaries. The divestment plans of the group continue to remain critical to the overall credit profile of the group."
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    COMMENTS

    Ramesh Poapt

    2 months ago

    disaster of regulating authorities and rating people!
    kumbhkarna alive!

    Vikram B Dalal

    2 months ago

    What is the role of a debenture trustees ? They are suppose to keep a track of size and quality of the underlying assets ? Many investors had invested their hard earned money with an understanding that the bonds are secured . And in case of bankruptcy, the assets are there to take care of principal and interest amount.

    REPLY

    SURAJIT SOM

    In Reply to Vikram B Dalal 2 months ago

    The whole system is rotten to the core. Everybody's hand is dirty. At least under NDA, these scams are now coming out in the open -at least some of them. If we were under UPA, even this would not have happened. Look at UPA's track record. Now most investors are regretting that they put their money in the market and not in FD. Never mind that keeping money in FD is much less productive for the economy. ( Much of our FDs ends up being NPA !!!!) Investing money in industries help them to grow. Industries-in turn-create job ,pay taxes etc. Instead ,incalculable amount of investors' money was(and is being) siphoned off . How can there be economic growth ?

    ROHIT SAXENA

    In Reply to SURAJIT SOM 2 months ago

    If NDA is so clean than from where does money is coming for setting up partnership with Rafale, forget about how such incompetent person can be any which way associated with country defense.
    And what is the truth of Demo?
    Everyone is looting the country, its commons man who is suffering.

    Aditya G

    2 months ago

    Rating agencies waking up a little too late...

    SURAJIT SOM

    2 months ago

    ADAG group has become like Junk Bond phenomenon of Wall Street which took place in the late eighties led by people like Milken. The book "The thieves den" explains it all. The ADAG picture will take months or years to unravel.

    Sujata dhamija

    2 months ago

    Home

    Sujata dhamija

    2 months ago

    JAB

    Probe finds holes in IL&FS brand subscription policy
    Innovative ways to cook up money making schemes within the IL&FS Group through a fee based business model were some of the jiggery-pokery methods employed by the closed user group cabal which controlled the shadow bank for over 25 years.
     
    The Serious Fraud Investigation Office (SFIO) and the Ministry of Corporate Affairs have found this innovative model in their overarching investigation.
     
    The investigation team analysed the novel and off centre Brand Subscription Policy of the Infrastructure Leasing & Financial Services Limited (IL&FS). The following facts emerged:
     
    * The policy stipulated that all subscribers and associate companies which were using the name of "IL&FS" or which intends to use the brand of "IL&FS" or which acknowledge having relationship with the IL&FS group, shall pay a base subscription fee (BSF) as quantified in the policy to IL&FS Ltd.
     
    * Prior to subscription to the policy, the group entity shall obtain necessary internal approval for the same.
     
    * Subscriber to the brand will derive commercial benefit from the subscription to the IL&FS brand. The benefit may emanate from different factors and may be useful for the subscriber from numerous dimensions.
     
    * The policy states various rationales for the brand subscription. The development of a fledgling business, to a large extent, has been possible because of the support and branding that has been provided by IL&FS. IL&FS group entities derive various benefits from the use of the "IL&FS" brand and enjoy a variety of services which IL&FS provides to all these entities.
     
    * The policy laid down the brand subscription fee as lower than the 1 per cent of total income/turnover, or 5 per cent of profit, before provision for contingencies and taxation.
     
    * The income, turnover and profit would be based on the previous years' audited accounts. Further, the brand subscription fee has been made subject to minimum of Rs 10 lakh per annum.
     
    * The subscription fee has to be charged annually and payable quarterly.
     
    Now comes the clincher. From the year 2010-11 to 2017-18, IFIN had paid an amount of Rs 128.58 crore to IL&FS Limited towards the subscription fee of the brand IL&FS as per the following details:
     
    Brand subscription fee paid to IL&FS Limited (in Rs crore):
     
    FY 11: 10.34 
    FY 12: 11.04
    FY 13: 14.28
    FY 14: 17.55
    FY 15: 18.15
    FY 16: 19.21
    FY 17: 19.21
    FY 18: 18.80
     
    Syndication and advisory activities
     
    From the investigation it was revealed that one of the sources of income of the company was from syndication business wherein the company entered into contracts with borrowers to arrange for sanctions/funding from different sources. 
     
    The syndication was undertaken by IFIN through the Project Syndication group. IFIN earned a fee for the syndication activities, termed as "syndication fee". Further, the company also used to undertake advisory assignments, wherein the company used to provide advisory services. IFIN also earned a fee income for the said advisory activities.
     
    Investigation revealed that the advisory mandate was approved by an Advisory Approval Memorandum (AAM) providing the details of the client, funds required, instrument for raising funds, potential fee income etc. All the AAMs are reviewed and approved by the Head, Debt Syndication & Distribution, and are reviewed by the related party transactions assessors i.e. Chief Risk Officer, IL&FS, Chief Financial Officer, Company Secretary and Legal Head. Post review, the AAM is approved by the Deputy Managing Director (DMD) and the Committee of Directors.
     
    IFIN had undertaken various syndicate assignments for its group entities during the period 2014-18. These transactions were "related party transactions" within the meaning of Section 188 of the Companies Act, 2013. Investigation revealed that the company had been booking fees income on accrual basis from the group entities. 
     
    During the course of investigation, the various syndication transactions carried out by IFIN for the various group companies has been examined by SFIO. The following conclusions have been arrived at:
     
    * As the fee income from syndication activities was booked on accrual basis, the profits of IFIN in the relevant period were boosted to that extent.
     
    * However, as the income was not received, the concerned company/client of IFIN from whom the syndication activity was undertaken, was shown as "debtors"/"sundry debtor" in the books of IFIN.
     
    * The total debt syndication fees charged by IFIN in the respective financial years is as under:
     
    Fee income booked
     
    FY 14: Rs 85.7 crore
    FY 15: Rs 112.4 crore 
    FY 16: Rs 120.5 crore
    FY 17: Rs 132 crore
    FY 18: Rs 142.5 crore
     
    There was a year-on-year non-receipt of fees and accordingly the same was written off in FY 2018-19.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

     

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