Mumbai: The National Company Law Appellate Tribunal (NCLAT) on Tuesday directed the insolvency resolution professional and committee of creditors (CoC) for Essar Steel Ltd as well as National Company Law Tribunal’s (NCLT) Ahmedabad bench to not pass any order, including an order of liquidation, with respect to Essar Steel’s insolvency.
This order effectively puts the corporate insolvency process for debt-ridden Essar Steel on hold.
A two-judge NCLAT bench headed by justice S.J. Mukhopadhyay also admitted the cross appeals moved by two resolution applicants for Essar Steel, ArcelorMittal India Pvt. Ltd and Numetal Ltd, and listed them to be heard on a daily basis from 23 July.
Meanwhile, the resolution professional would continue discharging his duties with respect to the management of the company.
In April, NCLT had set aside the first round of bidding for Essar Steel by Numetal and ArcelorMittal on the ground that the CoC and the resolution professional did not follow the procedure prescribed under the Insolvency and Bankruptcy Code (IBC).
The tribunal, however, allowed the two final resolution applicants, ArcelorMittal and Numetal, to cure their ineligibility under Section 29A.
While ArcelorMittal was disqualified for its relation with debt-ridden Uttam Galva and KSS Petron, Mauritius-based Numetal was disqualified for having links with Essar promoters, the Ruia family.
ArcelorMittal has challenged its disqualification under the IBC. Numetal, backed by Russia’s VTB Capital, has not only challenged its own disqualification but also disputed the permission granted to rival ArcelorMittal to clear bank dues of associate companies to cure its ineligibility.
Following NCLT’s direction, ArcelorMittal has deposited Rs7,000 crore in an escrow account with the State Bank of India to settle the dues of Uttam Galva Steels and KSS Petron on the condition that it is declared the successful resolution applicant for Essar Steel.
The resolution period deadline for Essar Steel is 28 May.