Hearing Standard Chartered Bank’s plea against the insolvency resolution plan of Essar
Steel, the National Company Law Appellate Tribunal (NCLAT) has said “there cannot be any discrimination” towards the stressed asset’s financial creditors.
The bank had alleged that the committee of creditors (CoC) had discriminated against it, as the bank was being offered only 1.7 per cent of its total dues from Essar
Steel’s resolution plan, while other financial creditors, forming part of the CoC, were getting over 85 per cent of their dues.
The two-member Bench asked the CoC and ArcelorMittal, the successful resolution applicant, to come up with a better equitable distribution plan.
Apart from StanChart, the operational creditors of the company should also get at least 10 per cent of total resolution plan amount, the NCLAT
“All operational creditors with claims less than Rs 1 crore should get 100 per cent of the dues and so should the employees of Essar Steel.
Only 90 per cent of Rs 42,000 crore should be allowed for financial creditors,” the Bench, headed by Chairperson Justice S J Mukhopadhaya, said.
The Bench also rejected a plea by the three directors of Essar Steel
Asia Holdings, who had contended that the plan submitted by ArcelorMittal
should be put on hold since they had not been given a copy of the resolution plan. The Bench, saying it was a “rotten plea” now, said that they should have moved this plea when the meetings of the CoC were going on.
On Thursday, the NCLAT
had also asked ArcelorMittal
to consider revising its Rs 42,000-crore bid for Essar Steel.
ArcelorMittal’s current bid for the company includes an upfront payment of Rs 42,000 crore towards the debt resolution of Essar Steel, with an additional Rs 8,000 crore of capital infusion into the company to help operational improvement, production levels, and profitability. In October 2018, the CoC had voted to approve ArcelorMittal’s plan and a letter of intent was issued.
had on Thursday also observed that a window of opportunity could be provided to the promoters of Essar Steel if they cleared all debt of the Essar group and gave the promoters one week to consider the same. The promoters had earlier offered to pay the entire debt amount of Essar Steel to take the company out of insolvency. The total debt of the Essar group stands at nearly Rs 85,000 crore.