Chennai: The National Company Law Appellate Tribunal (NCLAT) told Essar Steel Asia Holdings (ESAH) that its Rs 54,389-crore resolution plan for Essar Steel would only be considered if the entity cleared the Essar Group’s entire bad loans.
The tribunal’s position brought about another twist to the tale in the Essar Steel sale that is long-drawn. Only last week did the Ahmedabad bench of the NCLAT approve ArcelorMittal’s Rs 42,000 crore bid for the company.
“Think of Rs 80,000 crore more, we will make some room for you, whatever the amount is,” said a two-member bench of the tribunal led by justice SJ Mukhopadhaya on Thursday. The observations came during the hearing of the appeal filed by ESAH against the NCLT order.
“We may consider (the ESAH proposal) if (you pay) whatever — Rs 80,000 or Rs 90,000 (crore) — dues you have plus Rs 54,000 crore (for Essar Steel).”
According to reports, the new order suggests the tribunal may consider letting the Ruias, founders of the Essar Group and the erstwhile promoters of Essar Steel, enter the race for the latter if ESAH can come up with about Rs 1.4 lakh crore.
The tribunal has also asked ArcelorMittal why it should only pay Rs 42,000 crore if the asset’s value exceeds Rs 54,000 crore. “That is a basic question — if parties are ready to pay Rs 54,000 crore, why don’t you?,” justice Mukhopadhaya said. The bid was approved by Essar Steel’s committee of creditors last year.
ArcelorMittal’s bid includes an infusion of Rs 8,000 crore into Essar Steel over a period of time. ESAH had proposed to pay Rs 54,389 crore to settle all dues to financial and operational creditors of Essar Steel.
Senior counsel Abhishek Manu Singhvi, who was representing ArcelorMittal, questioned EASH’s ability to pay the proposed amount.
A key section of the Insolvency and Bankruptcy Code seeks to exclude erstwhile promoters from bidding for assets to make sure that they don’t get a chance to regain control after having defaulted on loans.
The NCLT’s decision paves the way for world’s largest steel maker ArcelorMittal’s entry into India. The steel company run by steel baron Lakshmi Niwas Mittal has been trying enter the Indian market for more than a decade. Indian-born Mittal’s steel company is the world’s largest by volume but, doesn’t have a steel plant to its name in his homeland.
The resolution plan for Essar Steel, which has been facing bankruptcy proceedings since August 2017.
|After more than a year, the long-drawn resolution process of Essar Steel seems to be finally moving towards closure with the Corporate Affairs Ministry ready to order a change in the management of the insolvent steel maker, stated reports.
The move comes even as a fresh petition was filed before the NCLAT by Essar Steel MD Prashant Ruia, Essar Group executives, as well as the Standard Chartered Bank, seeking to set aside the ArcelorMittal’s winning bid approved by the Ahmedabad bench of the NCLT.
Reports state that the MCA is waiting for the written order from the NCLT after which it would approve and order a management change in Essar Steel and that it may take a day or two. The legal contentions against the takeover can continue later, said reports.