Three former directors of Essar Steel namely Prashant Ruia, Dilip Oommen, and Rajiv Bhatnagar have approached the National Company Law Appellate Tribunal (NCLAT) against the National Company Law Tribunal (NCLT) Ahmedabad’s order approving ArcelorMittal’s resolution plan for debt-ridden Essar Steel.
Apart from the directors, dissenting financial creditor Standard Chartered has also moved the NCLAT against the Friday judgement of the NCLT. It has alleged that the Committee of Creditors (CoC) of Essar Steel had made wrong usage of its voting rights to keep out financial creditors such as Standard Chartered. This, the bank alleged, led to a reduction in its dues to Rs 60 crore from Rs 3,487 crore.
The NCLT’s Ahmedabad bench had on Friday approved ArcelorMittal's Rs 42,000-crore takeover bid for debt-laden Essar Steel. The tribunal had then suggested that the payment of Rs 42,000 crore by ArcelorMittal be distributed among financial and operational creditors in the ratio of 85:15. It had, however, said that these were merely suggestions and would not affect its order approving ArcelorMittal's plan.
“This court has limited jurisdiction and cannot impose its view on the commercial wisdom of the committee of creditors,” the Bench had then said.
ArcelorMittal's bid 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 support operational improvement, increase production levels and deliver enhanced levels of profitability. In October 2018, the CoC of Essar Steel had voted to approve ArcelorMittal’s plan and a letter of intent was issued.
Earlier, the Ahmedabad bench of NCLT had sent the first round of bids for Essar Steel back to the Resolution Professional (RP) and CoC for reconsideration, after it was found that both ArcelorMittal and the then bidder Numetal had not been given time to “cure” their ineligibility. The RP had disqualified both ArcelorMittal and Numetal in the first round.
While ArcelorMittal was disqualified as it had not till then cleared the debts of its related company Uttam Galva prior to the submission of bid, Numetal was disqualified owing to Rewant Ruia’s exposure in the company. Rewant is the son Ravi Ruia, who is a promoter of Essar.