The National Company Law Appellate Tribunal (NCLAT) on Monday asked National Company Law Tribunal’s Ahmedabad bench, hearing the Essar Steel insolvency matter, to give a chance to dissenting financial creditor Standard Chartered Bank and one representative of the operational creditors to place their objections to the preferred bidder ArcelorMittal’s resolution plan before passing an order by February 11.
Hearing an application filed by ArcelorMittal, chosen by the lenders to gain control of the debt-laden firm, for an early disposal of the matter, the two-member NCLAT bench also suggested that the NCLT “may provide the promoters limited hearing”. “If no order is passed by February 11, 2019, this appellate tribunal may call for records and pass appropriate order under Sec 31 of the IBC,” the bench said. 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 of India.
Section 31 of the Insolvency and Bankruptcy Code (IBC) empowers NCLT to approve or reject a resolution plan as approved by the committee of creditors (CoC). The NCLT had on January 29 termed as invalid the Ruia family’s Rs 54,389 crore resolution plan for reviving the resolution plan, observing that shareholders could not make a plea of this nature.
“In the present without expressing any opinion on the issue raised before us, we are of the view that the adjudicating authority should pass appropriate order under Section 31 in accordance with the law taking into consideration our earlier order dated January 23, 2019 on an earlier date,” the NCLAT said.
NCLAT had on January 23 asked NCLT’s Ahmedabad bench to pass an order, by January 31, on the resolution of the debt-ridden Essar Steel, failing which it would pass an order on February 4.
NCLT’s Ahmedabad bench is now considering the Essar Steel resolution matter for passing an appropriate order. It is hearing a large number of operational creditors and has also given time to hear the dissenting financial creditor (Standard Chartered Bank). The promoter also wants to be heard there, the NCLAT said.
NCLAT said since one of the representative of the operational creditors is required to be present in the CoC meeting, only the representative of the operational creditor can be given opportunity to highlight objection, if any, with regard to the resolution plan. All the financial creditors and operational creditors can not be given day to day hearing for passing an order.
“Further, the dissenting member of the CoC having raised objection to the resolution plan, it should be given hearing before passing any final order. Further, taking into consideration the interest of the promoters, the adjudicating authority may provide the promoters limited hearing, but its should be completed within five days. A detailed hearing is not be given including all the creditors,” the NCLAT said.
The ArcelorMittal bid promises Rs 39,500 crore by way of cash upfront but was publicly challenged when Essar Steel promoters offered to pay Rs 54,389 crore towards a full settlement of the entire admitted claims of the financial creditors, operational creditors, and workmen and employees of Essar Steel.
Source: Financial Express, February 5, 2019