NCLAT tells NCLT to speed up Essar Steel insolvency case
The National Company Law Appellate Tribunal (NCLAT), in an oral order on Thursday, directed the Ahmedabad bench of the National Company Law Tribunal (NCLT) to expedite the insolvency case filed against Essar Steel (India) Ltd.
NCLAT’s directive came while it was hearing the petition filed by the committee of creditors (CoC) of Essar Steel, through State Bank of India, against the resolution professional Satish Kumar Gupta and others, said two people privy to the development.
“Senior advocate Gopal Subramaniam, appearing for the lenders of Essar Steel, argued that while the statutory requirement is to finish the insolvency case within 270 days this case has already passed 500 days,” said one of the persons cited above.
“The lawyers have appealed to the appellate tribunal to direct NCLT to pass an order under Section 31 of the Insolvency and Bankruptcy Code (IBC),” said the other person.
The financial creditors had voted in favour of the resolution plan of ArcelorMittal on 25 October. Essar Steel shareholders then proposed to pay all its lenders, including operational lenders, in full.
Later, Standard Chartered Bank also approached the dedicated bankruptcy court challenging the resolution plan approved by the majority of the financial lenders. Standard Chartered, which has more than 7.5% weightage in the voting process, voted against ArcelorMittal’s resolution plan.
Essar Steel owes more than ₹49,000 crore to more than two dozen banks led by State Bank of India. It runs a 10-million-tonne steel mill at Hazira in Gujarat, which is involved in ore beneficiation, pellet making, iron making, steel making, and downstream facilities.
A division bench of NCLAT comprising Justice S.J. Mukhopadhaya and Justice Bansi Lal Bhat directed the tribunal to take an early decision in accordance with the order passed by the Supreme Court.
Email queries to resolution professional Satish Kumar Gupta of Alvarez & Marshal Pvt. Ltd, Essar Group got no response till the time of going to press. “The company has no comment on this,” said an ArcelorMitttal representative in response to an e-mail query.
The matter is listed at NCLT Ahmedabad for further hearing on 7 January. In November 2018, 30 operational creditors and Essar Steel shareholders challenged the CoC and the resolution professional’s decision to accept ArcelorMittal’s resolution plan.
Essar Steel Asia Holdings Ltd (ESAHL), which holds 72% of shares in Essar Steel, has submitted to NCLT Ahmedabad a proposal for settling the entire debt for about ₹54,389 crore .
In October, the Supreme Court allowed ArcelorMittal and Numetal to bid for bankrupt Essar Steel, provided they paid the dues of defaulters connected to them within two weeks. The CoC, on 25 October, voted in favour of handing over the debt-laden company to ArcelorMittal after it cleared pending dues to Uttam Galva and KSS Petron. ArcelorMittal’s resolution plan envisages an upfront payment of ₹42,000 crore to lenders and an additional ₹8,000 crore towards capital expenditure.
At Ahmedabad NCLT, CoC and the resolution professional have opposed ESAHL’s debt recast plan claiming it was against the apex court’s order and was also against the Insolvency and Bankruptcy law and that such proposals by Essar Steel shareholders have been rejected by them in the past.
ESAHL lawyers told the bankruptcy court their proposal should be considered as it was higher than rival ArcelorMittal’s offer.