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Unusual for lenders to spurn offer higher than rival's, Ruias on Essar bid

The Essar Steel Asia Holding had proposed to CoC, led by SBI, to pay an upfront Rs 543 billion to retake the management of Essar Steel, but approached NCLT after not receiving any reply from creditors

Press Trust of India  |  Ahmedabad 


Asia Holding, the holding company of the bankrupt that was controlled by the Ruias, Monday told the Ahmedabad bench of NCLT that it was "highly unusual" for lenders to not even consider its debt settlement proposal which was higher than its rival offer.

The Asia Holding had proposed to the committee of creditors (CoC), led by State Bank of India, to pay an upfront Rs 543 billion to retake the management of Essar Steel, but approached the (NCLT) after not receiving any reply from creditors.

Arguing for Essar Steel Asia Holding, counsel said their proposal "ensures full repayment to all the creditors, including operational creditors," and therefore, it is "highly unusual" that the lenders are not considering it.

During the last hearing, lenders and ArcelorMittal, which offered a Rs 420-billion bid to take over Essar Steel and was accepted by the CoC, had opposed the debt recast plan offered by claiming that it was against the order as well as the provisions of the Insolvency and Bankruptcy Code.

Essar Steel, which runs a 10-million-tonne steel mill in Gujarat, owes over Rs 490 billion to over two dozen banks led by the State Bank and has been under the bankruptcy proceedings since last June.

As per ArcelorMittal's resolution plan, Rs 420 billion will be paid to the secured lenders, while an additional

Rs 80 billion will be pumped in as working capital.

The NCLT is also hearing petitions filed by close to 30 operational creditors of Essar Steel seeking settlement of their dues from

These operational creditors have moved the NCLT against the resolution plan offered by the world's largest alloy maker as it denies those operational creditors with over Rs 10 million dues any settlement.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, December 17 2018. 23:10 IST