New Delhi: There is yet another spanner in the works for the Essar Steel insolvency resolution with the lenders of the insolvent entity asking the National Company Law Tribunal (NCLT) to dismiss a petition from company’s shareholders that has proposed to take it out from insolvency process by settling entire claim of creditors.
Arguing on behalf of Essar Steel’s creditors’ committee, counsel Ravi Kadam told the tribunal that the new offer by the Ruias was “not maintainable” and hence be dismissed. He also requested for a day-to-day hearing of the matter so that the matter could be decided without further delays. Justice HP Chaturvedi deferred the matter for hearing to December 10, saying the bench was not in full strength.
The resolution for Essar Steel has been topsy-turvy from the very beginning.
It has already overshot the Insolvency and Bankruptcy Code (IBC) stipulated maximum time of 270 days by a big margin. At a meeting early this month, the committee of creditors (CoC) declared ArcelorMittal’s bid as the successful resolution applicant with a total bid amount of Rs 50,000 crore. It also issued a letter of intent (LoI) to the Luxembourg-based steel maker.
The shareholders of Essar Steel countered this plan by submitting their own proposal to the CoC, proposing full settlement of the entire admitted claims of the financial creditors, operational creditors, workmen and employees aggregating to Rs 54,389 crore.
At the tribunal’s hearing, the lawyer for Essar Steel’s resolution professional said that Numetal had not paid its dues as instructed by the Supreme Court on an earlier date. Senior counsel Abhishek Manu Singhvi, arguing on behalf of ArcelorMittal, said the company has been issued LoI by lenders for the sale of Essar Steel.
Sources said Mihir Joshi, arguing for Essar Steel, countered that the action being taken by the CoC was unusual and taken in haste when a better and higher offer was being given.
In two separate petitions filed at the Ahmedabad bench of the NCLT, a total of 28 operational creditors had asked the tribunal to stay further resolution proceedings till their grievances are addressed.
The first petition, moved by 27 operational creditors, asked the tribunal to direct the committee of creditors to ensure full payment to them and take necessary steps to modify ArcelorMittal’s resolution plan for that. Alternatively, it asked the tribunal to direct the lenders to also consider the Ruia family’s last-minute offer that promises to repay all creditors in full.
The second petition, filed by Orissa Stevedores that is owed Rs 20.46 crore, also made a similar demand while asking the CoC to provide a copy of ArcelorMittal’s resolution plan.
The fresh offer for settlement by Essar Steel has been made under Section 12A of the IBC that allows for the withdrawal of a company from corporate insolvency resolution process. This is allowed only if the person or entity that initiated such proceeding gets 90 per cent of the voting share of CoC for withdrawal of insolvency application.
ESIL is among the list of top 12 large corporate debtors, which was referred by the RBI for resolution in insolvency courts. Banks and other creditors have total debt exposure of close to Rs 49,000 crore in the company.
