While Essar Steel’s hearing in the Ahmedabad bench of the National Company Law Tribunal (NCLT) was deferred till December 13, the insolvent company’s committee of creditors (CoC) on Monday argued that the settlement proposal made by its 72 per cent holding company — Essar Steel Asia Holding Ltd (ESAHL) — violated the Supreme Court (SC)’s recent ruling, and is hence non-maintainable.
Apart from the CoC, senior counsels of LN Mittal-led ArcelorMittal and resolution professional (RP) Satish Kumar Gupta argued that the Supreme Court order dated October 4, 2018, had only allowed ArcelorMittal and Numetal to resubmit resolution plans for acquiring Essar Steel.
But it was subject to clearing pending dues while Vedanta’s offer was to be considered too.
The counsels argued that the order prompted NCLT and CoC to consider plans submitted by only ArcelorMittal and Numetal within a stipulated period of eight weeks from the time of resubmission. ESAHL’s settlement offer was “non-maintainable.”
The two-member bench of adjudicating authorities Harihar Prakash Chaturvedi and Manorama Kumari deferred the hearing till December 13.
CoC’s senior counsel Ravi Kadam argued that ESAH’s application should be dismissed for being contrary to the apex court order.
“The Supreme Court has left a very narrow window open. Ordinarily, October 10, 2018, the process deadline of 270 days, including extensions allowed by NCLT, would be over but the Supreme Court extended it by two weeks for resubmission and eight weeks for CoC to approve. No other window was kept open and it only limits it to the two parties with the CoC being asked to evaluate Vedanta’s offer as well,” Kadam told the bench.
According to Kadam, on October 19, the CoC received and started evaluating Arcelor and Vedanta’s offers, while on October 25, Arcelor’s plan was approved by 92.4 per cent majority.
However, on the same day after approval, ESAHL sent its settlement proposal, apart from filing a caveat in the NCLT seeking a direction to the lenders to consider its settlement proposal.
ESAHL has made a Rs 543.89 billion settlement offer the day lenders voted in favour of ArcelorMittal’s Rs 420-billion offer. Under ArcelorMittal’s Rs 420 billion plan, financial creditors stand to gain Rs 419.87 billion out of the total dues of over Rs 494 billion, while operational creditors will get Rs 2.14 billion against their outstanding dues worth Rs 49.76 billion.
The offer by ESAHL was made under Section 12A to take the company out of bankruptcy. So far, 29 operational creditors have filed petitions seeking rejection of ArcelorMittal’s offer and backing ESAHL’s proposal.
“This proposal is beyond the Supreme Court order and dismissible since the period for fresh resolution plans is over and because ESAHL, as a co-applicant with Essar Steel, had already filed a debt restructuring plan with the CoC earlier this year but was rejected.
The CoC is also bound to not approve anything other than what the apex court has provided for and because time is over. Also, the present application has been made ‘on behalf of the corporate debtor’ as admitted by ESAHL.