An employee grinds a steel beam at the rolling and universal beam unit of a steel plant in Raigarh, Chhattisgargh, India (Photographer: Udit Kulshrestha/Bloomberg)

NCLAT Advances Hearing On Essar Steel To May 7

The National Company Law Appellate Tribunal advanced its scheduled hearing over the resolution process of debt-ridden firm Essar Steel to May 7.

The Committee of Creditors of the company had moved an urgent plea to seek an early hearing in this matter.

An NCLAT bench headed by Chairman Justice SJ Mukhopadhaya directed the matter to be listed on May 7.

The NCLAT was scheduled to hear the Essar Steel matter on May 13, where operational creditors and other stake holders of Essar Steel have moved over distribution of Rs 42,000 crore coming in from ArcelorMittal.

The promoters of the company had also approached the NCLAT, challenging the order of the Ahmedabad bench of the National Company Law Tribunal, which had on March 9 approved ArcelorMittal's bid for the company.

On April 12, in this matter, the Supreme Court had stayed the disbursement of funds to creditors while directing parties to maintain status quo.

It had also asked the tribunal to expeditiously decide the appeals before it.

Also read: NCLAT Says Essar Steel Lenders Cannot Discriminate Among Operational Creditors

The CoC had challenged the orders of the NCLAT of March 18 and March 20 before the Supreme Court by filing an SLP.

The NCLAT in its orders had asked the resolution professional of the company to call a fresh meeting of the CoC to consider redistribution of funds among financial and operational creditors.

Operational creditors of Essar Steel are not satisfied with the CoC over the distribution of Rs 42,000 crore coming from the resolution plan by global steel major ArcelorMittal.

The CoC of Essar Steel has divided operational creditors of the company into two types— one with claims under Rs 1 crore and another over Rs 1 crore.

Also read: Arcelor's $6 Billion Essar Deal Stymied by Lenders' Squabble

According to the resolution plan of ArcelorMittal approved by CoC on Oct. 24, 2018, operational creditors having claims below Rs 1 crore will get their dues and those with claims of over Rs 1 crore will receive almost zero.

Financial creditors would get an upfront Rs 41,987 crore payment against their admitted claims of Rs 49,395 crore while operational creditors are getting Rs 214 crore against their dues of Rs 4,976 crore.

Later, the CoC decided to allocate an additional Rs 1,000 crore to operational creditors after the NCLT and the NCLAT suggested it to rework on the distribution of funds.

NCLT Ahmedabad had initiated insolvency proceedings against Essar Steel on June 27, 2017.

Also read: Essar Steel Sale: Supreme Court Orders Status Quo To Be Maintained