The Delhi-based National Company Law Appellate Tribunal (NCLAT) has directed the Ahmedabad bench of National Company Law Tribunal (NCLT) to decide on the resolution plan for Essar Steel on or before February 11.
The appellate two judge bench’s directive came while hearing a plea by lenders to the steel company asking the court to expedite the process for resolution which has been ongoing for the last one-and-a-half years. “One of the petitioners in the case sought more time because his counsel was not present, so the court has given them a few more days. We now expect a resolution to happen soon,” said a creditor to Essar Steel.
92% lenders to the steel company have voted in favour of ArcelorMittal’s resolution plan on October 25. The plan promised Rs 42,000 crore to creditors on outstanding debt of Rs 49,000 crore as well as an additional Rs 8,000 crore infusion in the company, taking the total offer to RS 50,000 crore.
However, the Ruia family, promoters of Essar Steel made a Rs 54,000-crore counter offer that seeks to pay back all creditors. The Ruia family has sought to withdraw the company under Section 12A of the Insolvency and Bankruptcy Code (IBC) that allows it subject to approval by 90% of the creditors and the NCLT. Lenders are not very confident of the Essar offer and are backing the ArcelorMittal bid after the European steel company showed its seriousness by paying Rs 7,469 crore of debt in local companies Uttam Galva and KSS Petron, which owed creditors.
Bankers are hopeful that the Essar resolution will be completed soon. “We have no plans to sell the Essar Steel loan. Already the NCLAT has ordered to expedite the process and we expect some recovery by March-end,” said Rakesh Sharma, CEO at IDBI Bank, which has lent over Rs 5000 crore to the company.
Following the NCLAT order on Monday, the Ahmedabad bench of the NCLT will have to decide on whether to approve the lender’s nod for ArcelorMittal to take over Essar Steel.
Source: Economic Times, February 5, 2019