ArcelorMittal Says Looking To Close Essar Steel Acquisition Soon
Welcoming Supreme Court’s judgement in the Essar Steel insolvency case, Lakshmi Mittal-led ArcelorMittal SA said it is looking forward to complete acquisition of the debt-ridden steelmaker soon.
The distribution of claims in the Essar Steel insolvency case will take place according to the resolution plan by winning bidder ArcelorMittal, said the Supreme Court on Friday, setting aside a previous decision by NCLAT, which sought proportionate distribution of ArcelorMittal’s Rs 42,000 payout among different classes of creditors.
The Supreme Court judgement, in effect, paves the way for Lakshmi Mittal to enter India’s steel sector. Essar Steel will make Luxembourg-based ArcelorMittal India's fourth-largest steel producer.
"We look forward to the closing of the acquisition soon," ArcelorMittal said in a media statement, adding that it is "very pleased with the judgment that our resolution plan has been approved".
When contacted, an Essar Steel spokesperson said, “We wish ArcelorMittal and Nippon Steel the very best on their entry into the Indian market. They are acquiring a world-class facility in a market that has a long runway for growth.”
Spelling out the Supreme Court judgement, Justice Rohinton Nariman said, “There is no principal of equality between secured and unsecured creditors.” Bankruptcy courts don’t have a say in deciding the distribution of funds between creditors. They can only examine the legality of the resolution plan approved by the panel of lenders of an insolvent company, the court ruled.
The apex court said that the adjudicating authority can send back the resolution plan to the committee of creditors for implementation in accordance with the guidelines, but cannot change the commercial decision taken by the lenders.
The Supreme Court bench also relaxed the timeline of 330 days to find a resolution plan as prescribed under the Insolvency and Bankruptcy Code, and said it would be open for the adjudicating authority to maintain the timeline in exceptional cases.
The CoC resolution plan must balance the interest of all stakeholders, it added.