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ArcelorMittal-Essar Steel case: NCLAT calls for rework of payout of dues

ArcelorMittal has offered to pay Essar Steel creditors  ₹42,000 crore and plans an equity infusion of  ₹8,000 crore into the bankrupt company.Premium
ArcelorMittal has offered to pay Essar Steel creditors 42,000 crore and plans an equity infusion of 8,000 crore into the bankrupt company.

  • NCLAT tells Essar Steel's RP to call a fresh meeting of creditors to discuss distribution of funds coming in from ArcelorMittal
  • NCLAT upholds in 'letter and spirit' NCLT Ahmedabad's 8 March order, which approved ArcelorMittal offer for Essar Steel

New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Wednesday directed the resolution professional of Essar Steel to call a fresh meeting of committee of creditors (CoC) to discuss distribution of the 42,000 crore coming in from ArcelorMittal.

A two-member NCLAT bench, headed by Justice S.J. Mukhopadhaya, has asked for a reconsideration in distribution of ArcelorMittal's funds between financial and operational creditors of Essar Steel in the meeting.

"The resolution professional (RP) may call for the meeting of the Committee of Creditors for reconsideration of distribution of funds," the bench said.

NCLAT also upheld in "letter and spirit" NCLT Ahmedabad's 8 March order, which approved ArcelorMittal's offer for Essar Steel.

NCLAT was hearing an urgent application moved by Standard Chartered Bank, an operational creditor of the company.

The next hearing in the matter has been scheduled for 27 March.

Standard Chartered Bank moved NCLAT against ArcelorMittal's offer for Essar Steel over insufficient payout of its dues.

The Arcelor-Essar deal returns StanChart only 1.7% of its total dues to Essar Steel, while other financial creditors, which are part of the CoC, are receiving over 85% of their dues.

ArcelorMittal’s resolution proposal provides financial creditors 41,987 crore out of their total dues of 49,395 crore. Operational creditors, under the plan, would get just 214 crore against the outstanding of 4,976 crore.

If the ArcelorMittal plan is implemented, Standard Chartered will only get 60 crore against its claims of 3,187 crore from Essar Steel.

Essar Steel owns a 10-million-tonne steel mill at Hazira in Gujarat.

Essar Steel was among the first 12 cases selected by the Reserve Bank of India to be resolved under the Insolvency and Bankruptcy Code (IBC).

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