Essar Steel lenders urge NCLAT to expedite insolvency resolution process

Lenders to Essar Steel on Wednesday urged the NCLAT to complete its insolvency resolution process in "quick" time, saying the debt-ridden company is incurring a daily loss of Rs 17 crore.

At a hearing of the National Company Law Appellate Tribunal (NCLAT), Sudipto Sarkar, counsel appearing for the Committee of Creditors (CoC) of Essar Steel, requested it to expedite the process.

"We want a quick resolution," Sarkar said, adding that Essar Steel was suffering "a daily loss of Rs 17 crore".

Sarkar also said that based on the order of the NCLT, the lenders had given an opportunity of being heard to Numetal and ArcelorMittal, after which both were found to be ineligible to bid for the company.

Senior advocate Darius Khambatta, appearing for the Resolution Professional, stated that the RP had found both ArcelorMittal and Numetal to be ineligible.

Under the Insolvency and Bankruptcy Code (IBC), CoC and Resolution Professional (RP) have to complete the Corporate Insolvency Resolution Process (CIRP) in 180 days.

This can be extended for another 90 days by the NCLT, failing which the stressed firm goes for liquidation.

"The entire period staring from April 19, 2018 to the final disposal of the present appeals be specifically excluded in the computation of the Corporate Insolvency Resolution Process period," CoC of Essar Steel said in its plea.

In August last year, the Ahmedabad bench of the National Company Law Tribunal (NCLT) has admitted the insolvency plea filed by an SBI-led consortium and February 12, 2018 was the date for resolution plan for the company.

However, Russia's VTB Capital-backed Numetal Ltd had approached the NCLT against the RP in March after it was declared ineligible. ArcelorMittal also approached the tribunal after the rejection of its bid.

On April 19, the NCLT had directed lenders to review their decision rejecting the bids and had excluded the time period of 31 days.

Later on April 26, 2018 both Numetal and ArcelorMittal filed petitions in the NCLAT challenging the disqualification of their first round of bids.

Passing an interim order on May 22, 2018, the NCLAT had granted stay on approval/rejection of any resolution plan by the CoC and also stayed any decision of liquidation by the lenders or adjudicating authority (which is NCLT).

Both Numetal and ArcelorMittal put in bids in the second round after their offers in the first round were opined to be invalid.

Numetal faced disqualification as its 25 per cent stake was owned by Aurora Trust of the Ruia family, the promoters of Essar Steel. ArcelorMittal's first bid was rejected because of it holding shares in loan defaulting companies Uttam Galva Steel and KSS Petron.

For the second round of bids, VTB Bank sought to sever ties with the Ruia family by buying out Aurora Trust's stake in Numetal. ArcelorMittal transferred Rs 7,000 crore to an escrow account of SBI to clear outstanding loans of Uttam Galva and KSS Petron.

In the second round of bidding, Anil Agarwal's Vedanta Resources also joined the race. Also, JSW joined Numetal for the bid.

The matter would come for next hearing on July 16.