Lenders Say New Offer By Essar Steel’s Promoters Not Maintainable

Lenders of insolvent Essar Steel Ltd. asked for the company’s petition at the National Company Law Tribunal to be dismissed, calling the new offer by the Ruias “not maintainable”.

Ravi Kadam, arguing on behalf of Essar Steel’s creditors’ committee, requested for a day-to-day hearing of the matter. Justice HP Chaturvedi deferred the matter for hearing on Dec. 10, saying the bench was not in full strength.

The Ruia family had offered to repay creditors of the steel firm in an attempt to withdraw it from the insolvency resolution process. The company’s shareholders had said they are willing to pay Rs 54,389 crore to the creditors. That came after the lenders picked ArcelorMittal as the preferred bidder last month.

The lawyer for Essar Steel’s resolution professional said that Numetal Ltd. had not paid its dues as instructed by the Supreme Court in a previous hearing. And Senior Counsel Abhishek Manu Singhvi, arguing on behalf of ArcelorMittal, said the company has been issued letter of intent by lenders for sale of Essar Steel.

Mihir Joshi, arguing for Essar Steel, countered that the action being taken by the committee of creditors was “unusual” and “in haste” when the company is willing to pay Rs 54,000 crore, Bloomberg reported.

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 Ltd. that is owed 20.46 crore, also made a similar demand while also asking the committee of creditors to provide a copy of ArcelorMittal’s resolution plan.