Ruias Strike Again, File Fresh Petition Against Essar Steel Insolvency Process
The Ruia family seems unstoppable when it comes to legal challenges against the insolvency process that is poised to take away Essar Steel Ltd. from their stable.
In a fresh application filed with the Ahmedabad bench of the National Company Law Tribunal on Monday, three directors led by Prashant Ruia said they should have been consulted before the lenders approved ArcelorMittal’s offer as the winning bid.
The directors quoted a recent Supreme Court order in the Ruchi Soya Ltd. case, which laid down that directors on boards of companies under the Insolvency & Bankruptcy Code should be allowed to be present during meetings of the committee of creditors, and provided details regarding any resolution plan being considered. This, the Supreme Court said, is on the condition that the director is not related to the insolvent company.
Dilip Oommen, managing director and chief executive officer at Essar Steel, and Rajiv Kumar Bhatnagar, director-projects, are the other two who jointly filed the application.
They claimed that they were asked to step out of multiple CoC meetings as the matters being discussed were deemed to be confidential. This was against the insolvency code, the application said, adding that a letter to the resolution professional in October 2017 didn’t change the conduct of the CoC.
What The Directors Want
The directors sought that the CoC’s decision to back ArcelorMittal India Pvt. Ltd.’s bid should be quashed and set aside. They also asked the NCLT to direct the resolution professional and the CoC to provide them with all documents necessary for deliberations and discussions during meetings.
But most importantly, the directors have asked the CoC and the resolution professional to conduct a fresh vote on plans submitted by prospective resolution applicants.
Essar Steel’s promoters have already lost a bid to settle more than Rs 54,000 crore debt in full and take their company out of the insolvency process. The Ahmedabad bench of the NCLT on Jan. 29 ruled that the right to withdraw from insolvency proceedings remains with the entity that had filed the application in the first place—State Bank of India and Standard Chartered Bank in Essar Steel’s case.
The case has already seen considerable delays due to repeated litigation by the promoter family. Essar Steel was admitted for insolvency action in August 2017 and more than 500 days have since passed. The creditors of Essar Steel have said in various courts that they have been losing Rs 500 crore a month in interest earnings due to the delays in the insolvency process.
The National Company Law Appellate Tribunal, meanwhile, had directed the Ahmedabad bench of the NCLT to decide on ArcelorMittal’s bid before Feb. 11.