Mumbai: The AION Capital-JSW Steel consortium has agreed to pay small operational creditors of Monnet Ispat after the dedicated bankruptcy court observed that there is nothing for small vendors in the resolution plan and they need to keep them in mind while acquiring an asset at such an attractive valuation.
The lone successful bidder agreed to set aside around ₹ 25 crore for MSME vendors, which will increase the total acquisition amount to ₹ 2,875 crore for the AION-JSW Steel consortium.
On Thursday, the division bench of the National Company Law Tribunal (NCLT), Mumbai, presided by B.S.V. Prakash Kumar and Ravi Kumar Duraisamy, said that the successful resolution plan doesn’t have anything towards government dues as well as operational creditors and the bidders are getting a prized asset at a very attractive price.
“When you are getting a company for ₹ 2,850 crore whose fair market value is over ₹ 4, 000 crore then you should make at least some provision for small operational creditors," observed the Mumbai bench of the NCLT while hearing arguments of the AION-JSW application. “You can eliminate big operational creditors that are listed companies or major corporations but you have to think about micro and small enterprises."
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Fredun De Vitre, senior counsel who was appearing for the AION-JSW consortium, said that they are willing to make an allocation of ₹ 25 crore for such small operational creditors. The counsel further argued that the consortium will have 75% of the equity in the Monnet Ispat.
Monnet Ispat is part of the first lot of 12 large non-performing loans referred by the Reserve Bank of India (RBI) for early resolution under the Insolvency and Bankruptcy Code (IBC) last year.
The company owes lenders ₹ 10,000 crore and the committee of creditors (CoC) has agreed to take a haircut of around 72% to settle the loan.
So far, a consortium of AION Capital Partners Ltd and JSW Steel Ltd has made a binding offer for Monnet Ispat and is considered to be the front-runner to acquire the asset. AION Capital holds a 70% stake in the consortium while JSW Steel holds the rest.