State-run gas utility GAIL (India) and Gujarat Energy Transmission Corp (GETCO) have moved the National Company Law Tribunal (NCLT) seeking rejection of ArcelorMittal's Rs 420 billion takeover plan for Essar Steel, saying operational creditors have been left out in the proposal.
Last month, a committee of Essar Steel lenders picked ArcelorMittal's Rs 420 billion proposal to take over the debt-laden company by paying Rs 419.87 billion out of total dues of Rs 493.95 billion of financial creditors. Operational creditors, under the plan, are to get just Rs 2.14 billion against the outstanding of Rs 49.76 billion.
Aggrieved by ArcelorMittal's resolution plan, GAIL and GETCO filed separate interlocutory applications in the Ahmedabad-bench of NCLT saying they have claims of over Rs 18 billion against Essar Steel India, which are not being fully cleared.
GAIL in the November 16 application said it has a claim of Rs 9.07 billion towards non-offtake of gas that it had signed for under a take or pay agreement. Of this, about Rs 1.25 billion has already been admitted in the list of creditors of the company.
"The resolution plan submitted is in contravention of Section 30 (2) of Insolvency and Bankruptcy Code (IBC) 2016. That even otherwise resolution plan is neither legal nor proper in the interest of all creditors," it said calling the resolution plan "arbitrary, irrational, illogical that puts in jeopardy the interest of operational creditors."
Stating that the resolution plan "completely fails to protect the interest of operational creditors", the GAIL petition sought rejection of the ArcelorMittal proposal.
GETCO, which wheeled power for the company, in a separate petition sought a direction to include its entire claim of Rs 8.96 billion and rejection of the resolution plan in case this is not met.
"The resolution plan is not in accordance with the provision of the IBC, 2016 and IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as it does not reflect the crystallised and legally adjudicated debt/liability of the corporate debtor," it said seeking rejection of the plan.
Last week, as many as 29 operational creditors of Essar Steel had filed petitions in NCLT pleading that the debt settlement proposal made by shareholders of Essar Steel be considered as it would pay off all outstanding of both financial and operational creditors.
The 29 operational creditors, which have about Rs 3.81 billion in outstanding dues from Essar Steel, wanted ArcelorMittal -- which the lenders have picked to take over the debt-ridden firm -- to pay in full to all operational creditors or allow consideration of the Rs 543.89 billion proposal of the owners of Essar Steel to be considered.
Essar Steel Asia Holding Ltd (ESAHL) -- the promoter of Essar Steel -- has proposed to pay Rs 543.89 billion to clear all dues of the financial and operational creditor in a last-ditch effort to avert losing their flagship company.
"NCLT does not act as a post office to merely put a seal of approval on the resolution plan cleared by Committee of Creditors. NCLT is compliance of Act and rules and interest of all sets of creditors and if that is not done, NCLT may refuse to put a seal of approval on resolution plan.
"On the other side, if the resolution plan goes through NCLT, it will bind everyone. Thus, the scrutiny by NCLT of the objections raised by all stakeholders is very crucial and important," GAIL said in the petition.