GAIL India petitions in NCLT Ahmedabad saying it would prefer a competing bid of Essar Steel Asia Holdings, representing the Ruia family, the former promoters of Essar Steel
Mumbai: Joining the bandwagon of operational creditors unhappy with ArcelorMittal’s takeover plan of Essar Steel Ltd, GAIL (India) Ltd registered its objection with the Ahmedabad bench of the National Company Law Tribunal (NCLT) on 16 November. The state-owned gas utility has petitioned the bankruptcy court saying it would prefer a competing bid of Essar Steel Asia Holdings, representing the Ruia family, the former promoters of Essar Steel.
GAIL (India) Ltd had filed claims of ₹ 907.2 crore against Essar Steel, of which only ₹ 124.88 crore was admitted by the resolution professional.
GAIL said ArcelorMittal’s resolution plan is “arbitrary, irrational, illogical and puts in jeopardy the interest of operational creditors of Essar Steel".
Mint has reviewed a copy of this application.
ArcelorMittal, for its part, has not indicated that it will increase its bid for Essar Steel to satisfy operational creditors.
A spokesperson for the Luxembourg-based steel company said: “We have followed the insolvency and bankruptcy code (IBC) process in good faith since first submitting our expression of interest (EOI) in 2017. The committee of creditors has clearly decided ArcelorMittal’s plan is in the best interests of Essar Steel and we are confident that the process will be implemented correctly and according to the law."
On 25 October, more than 92% of Essar Steel’s creditors voted in favour of ArcelorMittal as it had placed the highest bid for the stressed assets.
However, on the same day, as a last ditch effort to delay losing possession of Essar Steel, the Ruia family had submitted a proposal to the committee of creditors (CoC) agreeing to pay ₹ 54,389 crore to all creditors of Essar Steel, which included settling claims of operational creditors as well as of the employees in full—something that ArcelorMittal does not provide for.
While the committee of creditors has not changed its mind following the new offer by the Ruias, operational creditors have been filing cases with the National Company Law Tribunal, pleading that their claims be treated at par.
Standard Chartered Bank was the first one to file a claim with the National Company Law Tribunal as a dissenting financial creditor. Essar Steel owes more than ₹ 3,400 crore to Standard Chartered Bank.
The National Company Law Tribunal will next hear the case on 28 November.
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