NCLT to decide on Essar Steel shareholders’ proposal by 31 January

Ahmedabad: The Ahmedabad bench of the National Company Law Tribunal (NCLT) said Monday it will pronounce before 31 January its order on a petition filed by Essar Steel shareholders for submission of its proposal to settle dues worth ₹ 54,389 crore. The pronouncement comes after observations made by the National Company Law Appellate Tribunal (NCLAT), which had last week asked NCLT Ahmedabad to expedite the insolvency case filed against Essar Steel (India) Ltd.

“We will pronounce our order on maintainability of the petition by 31 January. Based on it, further hearing related to it would begin,” according to Harihar Prakash Chaturvedi, member judge at NCLT Ahmedabad.

Essar Steel owes more than ₹ 49,000 crore to more than two dozen banks led by State Bank of India. It runs a 10-million-tonne steel mill at Hazira in Gujarat, which is involved in ore beneficiation, pellet-making, iron-making, steel-making, and downstream facilities.

Essar Steel Asia Holdings Ltd (ESAHL), which holds 72% of shares in Essar Steel, has submitted to NCLT Ahmedabad a proposal for settling the entire debt for about ₹ 54,389 crore.

In October, the Supreme Court allowed ArcelorMittal and Numetal Mauritius to bid for Essar Steel, provided they paid the dues of defaulters connected to them within two weeks. The committee of creditors, on 25 October, voted in favour of handing over the debt-laden Essar Steel to ArcelorMittal after it cleared pending dues of Uttam Galva and KSS Petron. ArcelorMittal’s resolution plan envisages an upfront payment of ₹ 42,000 crore to lenders and an additional ₹ 8,000 crore towards capital expenditure.

At Ahmedabad NCLT, CoC and the resolution professional have opposed ESAHL’s debt recast plan claiming it was against the apex court’s order and was also against the insolvency law and that such proposals by Essar Steel shareholders have been rejected by them in the past.

Senior counsel Abhishek Manu Singhvi, appearing on behalf of ArcelorMittal in NCLT Ahmedabad, said that the insolvency and bankruptcy code was special and it would overrule the earlier Transfer of Property Act on which the shareholders of Essar Steel are pinning their hopes.

“There is no right to redemption under the IBC Act as sought by Essar Steel Asia Holdings Ltd. Essar is trying to ambush the process. It is the worst kind of abuse of the process,” he told the tribunal.

ArcelorMittal’ lawyers told NCLT Ahmedabad that according to the IBC Act, only the resolution professional has the right to submit a proposal. By approaching NCLT, Essar Steel shareholders are trying to subvert the process, they said.

While ArcelorMittal and the lenders have been seeking nod of the tribunal for completion of the debt resolution process, Essar Steel Asia Holdings, Standard Chartered Plc and several operational creditors have objected to ArcelorMittal’s proposal.

ESAHL lawyers told the bankruptcy court their proposal should be considered as it was higher than rival ArcelorMittal’s offer.

The resolution process is not for sale of assets but is meant to maximize the revenue and revive the company, according to senior counsel Mihir Joshi, who appeared on behalf of ESAHL.