Conclude Essar Steel insolvency case by January 31: NCLAT to NCLT

Essar says CoC should not be forced to accept resolution plan which undervalues the company

The National Company Law Appellate Tribunal (NCLAT) has asked the Ahmedabad Bench of the National Company Law Tribunal (NCLT) to give its decision on the Essar Steel insolvency case by January 31.

 

Or else, it said on Wednesday it would itself give an order on the case on February 4.

 

The NCLT Bench in Ahmedabad had reserved its order on a maintainability plea moved by the erstwhile promoters of Essar Steel.

 

They had offered to settle all the debt but this came well after a bid from ArcelorMittal, the global giant, had been accepted.

 

The promoters had through their holding company, Essar Steel Asia Holding, made an offer last October to retain control by by offering Rs 54,389 crore for the company, thereby making a case for withdrawal of the company from insolvency. This included Rs 47,507 crore in upfront cash payment to the creditors.

 

This application was made under the amended Section 12 (A) of the Insolvency and Bankruptcy Code (IBC). This allows withdrawal of insolvency applications admitted under Section 7 or Section 9, if at least 90 per cent of the Committee of Creditors (CoC) of the company in question approve the plan. ArcelorMittal's counsel Senior Advocate Neeraj Kaul told the NCLAT on Wednesday that the Supreme Court’s (SC’s) order of October in the case had invoked Section 142 of the IBC, which was for special circumstances and a limited number of parties.

 

Since Essar Steel Asia Holding was not a party at that time, it could not be allowed now to place any settlement bid.

 

The SC had on October 4 allowed both ArcelorMittal and Numetal to bid for Essar Steel, provided they had cleared their respective dues. Once that was done, the CoC would have to consider all bids.

 

If within six weeks the committee was not able to find any resolution plans viable, Essar Steel was to go into liquidation, the top court had said.

 

For ArcelorMittal to become eligible for offering a resolution plan, it had to clear Rs 7,000 crore in debt of its former subsidiaries, Uttam Galva and KSS Petron.

 

Numetal had to similarly pay nearly Rs 49,000 crore in dues' before it was eligible to bid again as Rewant Ruia, son of erstwhile promoter Ravi Ruia, was part of VTB Bank-backed Numetal.

 

Though Rewant Ruia had later left his shareholding in Numetal, the SC had decided this 'corporate veil' could not hide the fact that he was a connected person to the promoter of the corporate debtor.