New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Monday refused to direct the Mumbai bench of the National Company Law Tribunal (NCLT) to defer its pronouncement on State Bank of India’s (SBI’s) appeal seeking initiation of insolvency plea against Uttam Value Steel and Uttam Galva Metallics Ltd, subsidiaries of debt-laden Uttam Galva Steels Ltd.

NCLT is set to pronounce its order on the admission of SBI’s insolvency plea on 26 June after it was reserved earlier this month.

A two-judge NCLAT bench headed by justice S.J. Mukhopadhyay was hearing an appeal moved by Uttam Value Steel and Uttam Galva Metallics, to defer the NCLT order by four weeks as the two corporate debtors were at an “advanced stage of negotiation" with a “foreign bank" to reach a settlement outside the insolvency and bankruptcy code.

NCLAT, however, gave liberty to the promoters of both companies to negotiate with a third party investor to settle dues, even if insolvency resolution is kick-started by NCLT.

A.S. Chandhiok, counsel for Uttam Value Steel and Uttam Galva Metallics submitted that a foreign bank was willing to pay the dues on behalf of Uttam Value Steel and Uttam Galva Metallics.

Arun Kathpalia appearing for SBI said that insolvency application had already been pending for six months before NCLT and had not received any “direct offer" from any investor to pay the outstanding dues. Thus, no interference by the appellate authority is mandated at this state, he argued.

Uttam Value Steel and Uttam Galva Metallics owe banks 3,200 crore and 2,200 crore, respectively.

Ziraat Ban, the second-largest state-owned bank of Turkey, has reportedly sent a letter to SBI stating that one of their high net worth clients is interested in acquiring the assets of the two Uttam Galva subsidiaries.

In a separate insolvency proceeding against Essar Steel Ltd, following a direction by the Ahmedabad bench of NCLT, ArcelorMittal Netherlands NV—which once owned shares in loan defaulter Uttam Galva—has deposited Rs7,000 crore in an escrow account with the State Bank of India to settle the dues of Uttam Galva Steels on the condition that it is declared the successful resolution applicant for Essar Steel.

If NCLAT declares ArcelorMittal eligible, the money in the escrow account will go towards settling Uttam Galva’s debt.

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