Furnace lining bricks glow red hot in a furnace at the ArcelorMittal steel plant in Zenica, Bosnia. (Photographer: Oliver Bunic/Bloomberg)

IBC: NCLT To Announce Decision On Maintainability Of Essar Steel Asia’s Bid On Jan. 31

The Ahmedabad bench of the National Company Law Tribunal on Monday reserved its verdict on the maintainability of the bid by Essar Steel Asia Holdings to retake the management of the debt-laden company.

The NCLT bench comprising BP Chaturvedi and Manorama Kumari said they will pass an order on the plea by Jan. 31.

ArcelorMittal, whose Rs 42,000-crore offer to take over the bankrupt Essar Steel was accepted by the committee of creditors, on Monday told NCLT that there is no right to redemption under the bankruptcy law as being sought by EssarSteel Asia Holdings.

It said as per section 12A of the Insolvency and Bankruptcy Act only resolution professional has right to file such an application after getting the approval of 90 percent of the lenders.

In their submission, the lenders requested that the matter be decided expeditiously in the interest of all the parties involved.

Essar Steel Asia Holdings told the bench that lenders not considering its debt settlement proposal, which was higher than its rival offer, is surprising.

Essar Steel Asia had proposed to the lenders led by State Bank of India, to pay an upfront Rs 54,389 crore to retake the management, which “ensures full repayment to allthe creditors, including operational creditors”. ArcelorMittal opposed this claiming that it was against the Supreme Court order as well as the provisions of the bankruptcy law.

Essar Steel, which runs a 10-million-tonne steel mill in Gujarat, owes over Rs 49,000 crore to over two dozen banks led by SBI and has been under the bankruptcy proceedings since June 2017.

As per ArcelorMittal's resolution plan, Rs 42,000 crore will be paid to the secured lenders, while an additional Rs 8,000 crore will be pumped in as working capital.

The NCLT is also hearing petitions filed by close to 30 operational creditors of Essar Steel seeking settlement of their dues from ArcelorMittal.

These operational creditors have moved the NCLT against the resolution plan offered by the world’s largest alloy maker ArcelorMittal as it denies settlement to operational creditors with over Rs 1 crore dues.

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