Essar Steel Insolvency: Ruias Surprised At Lenders Spurning Their Proposal
Essar Steel Asia Holding, the holding company of the bankrupt Essar Steel that was controlled by the Ruias, Monday told the Ahmedabad bench of NCLT that it was "highly unusual" for lenders to not even consider its debt settlement proposal which was higher than its rival offer.
The Essar Steel Asia Holding had proposed to the committee of creditors, led by State Bank of India, to pay an upfront Rs 54,389 crore to retake the management of Essar Steel, but approached the National Company Law Tribunal after not receiving any reply from creditors.
Arguing for Essar Steel Asia Holding, counsel Mihir Joshi said their proposal "ensures full repayment to all the creditors, including operational creditors," and therefore, it is "highly unusual" that the lenders are not considering it.
During the last hearing, lenders and ArcelorMittal, which offered a Rs 42,000-crore bid to take over Essar Steel and was accepted by the CoC, had opposed the debt recast plan offered by Essar Steel Asia Holding claiming that it was against the Supreme Court order as well as the provisions of the Insolvency and Bankruptcy Code.
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 the State Bank and has been under the bankruptcy proceedings since last June.
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 those operational creditors with over Rs 1 crore dues any settlement.