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.

ArcelorMittal’s Essar Steel bid offers no payment to GAIL for its outstanding dues, GAIL said in its application, while Essar Steel Asia Holdings Ltd promised the full payment of 124.88 crore.

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."

Mint reported on Monday that the Gujarat Energy Transmission Corp. (Getco) has also challenged ArcelorMittal’s resolution plan, which has been endorsed by Essar Steel’s committee of creditors.

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The Gujarat government-owned electricity transmission company has also approached the National Company Law Tribunal in Ahmedabad to recover its dues in excess of 827 crore from Essar Steel.

With GAIL (India) Ltd application, the claims by Getco and a host of other operational creditors who had filed their objections to ArcelorMittal’s resolution plan, now amount to about 1,600 crore.

ArcelorMittal’s Essar bid bid envisages an upfront payment of 42,000 crore towards debt resolution and 8,000 crore towards capital infusion into Essar Steel, while the Ruia-promoted Essar Steel Asia Holdings has offered 54,389 crore to settle all financial and operational creditors.

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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.

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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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