A red hot steel slab passes through a rolling mill in the slab casting shop at a steel plant in Hisar, Haryana, India. (Photographer: Udit Kulshrestha/Bloomberg)

GAIL Moves NCLT Seeking Rejection Of ArcelorMittal’s Bid For Essar Steel

GAIL (India) Ltd. and Gujarat Energy Transmission Corp. have moved the National Company Law Tribunal seeking rejection of ArcelorMittal’s Rs 42,000-crore takeover plan for Essar Steel, saying operational creditors have been left out in the proposal.

A committee of Essar Steel lenders last month picked ArcelorMittal’s Rs 42,000-crore proposal to take over the debt-laden company by paying Rs 41,987 crore out of total dues of Rs 49,395 crore of financial creditors. Operational creditors, under the plan, are to get just Rs 214 crore against the outstanding of Rs 4,976 crore.

Aggrieved by ArcelorMittal’s resolution plan, GAIL and GETCO filed separate interlocutory applications in the Ahmedabad-bench of NCLT. The companies said they have claims of over Rs 1,800 crore against Essar Steel India, which are not being fully cleared.

GAIL in the Nov. 16 application said it has a claim of Rs 907.20 crore towards non-offtake of gas that it had signed for under a take or pay agreement. Of this, about Rs 125 crore has already been admitted in the list of creditors of the company.

GAIL petition sought rejection of the ArcelorMittal proposal stating that the resolution plan was in contravention of Section 30 (2) of Insolvency and Bankruptcy Code and “completely fails to protect the interest of operational creditors”.

GETCO, which wheeled power for the company, in a separate petition sought a direction to include its entire claim of Rs 896.52 crore and rejection of the resolution plan in case this is not met.

Last week, as many as 29 operational creditors of Essar Steel had filed petitions in NCLT pleading that the debt settlement proposal made by shareholders of Essar Steel be considered as it would pay off all outstanding of both financial and operational creditors.

The 29 operational creditors, which have about Rs 381 crore in outstanding dues from Essar Steel, wanted ArcelorMittal—which the lenders have picked to take over the debt-ridden firm—to pay in full to all operational creditors or allow consideration of the Rs 54,389 crore proposal of the owners of Essar Steel to be considered.

Essar Steel Asia Holding Ltd., the promoter of Essar Steel, has proposed to pay Rs 54,389 crore to clear all dues of the financial and operational creditor in a last-ditch effort to avert losing their flagship company.

Also read: Essar Steel’s Resolution Faces Another Hurdle As Operational Creditors Move NCLT