New Delhi: The lenders of Essar Steel Ltd on Wednesday informed National Company Law Appellate Tribunal (NCLAT) that a meeting of the committee of creditors (CoC) of the debt-ridden firm is going on over distribution of ₹42,000 crore offered by global steel major ArcelorMittal SA.
The appellate tribunal was informed that a decision by the CoC on whether Standard Chartered Plc, an operational creditor, should get higher payout for its dues to Essar Steel would come by Friday, following which it adjourned the matter to 9 April for the next hearing.
"We have to see the outcome of the Committee of Creditors (CoC) meeting," said a two-member NCLAT bench headed by chairman justice S.J. Mukhopadhaya.
The NCLAT had on 20 March asked the resolution professional of Essar Steel to call for a fresh meeting of its CoC to reconsider distribution of the ₹42,000 crore offer.
The appellate tribunal had then said that the 8 March order of the Ahmedabad bench the National Company Law Tribunal (NCLT) approving ArcelorMittal's Essar Steel bid should be implemented in "letters and spirit".
During the proceedings at NCLAT, the counsel informed the bench that meeting was underway in accordance with the NCLAT orders. They submitted that the CoC is considering distribution of funds between the financial creditors and operational creditors as per the suggestions from NCLT Ahmedabad.
NCLT Ahmedabad has suggested a 85:15 distribution between the financial and operational creditors against the 90:10 distribution between them as proposed in the resolution plan.
Moreover, as per the previous direction of NCLAT, the Insolvency and Bankruptcy Board of India (lBBI) on Wednesday informed the ratio of distribution between financial creditors and the operational creditors in the resolution plan.
According to the IBBI counsel, in the 88 IBC cases that have seen successful resolution, financial creditors, on an average, have received 48.24% of their claims and operational creditors have received 48.41%.
On 20 March, in the last hearing, the NCLAT also had directed IBBI to share data over distribution of funds among the financial and operational creditors in the resolution plans.
The NCLAT was hearing a plea by Standard Chartered Bank, an operational creditor of the company, challenging the distribution of fund.
Standard Chartered is against plan as it was being given only 1.7% of its total dues from Essar Steel, while other financial creditors, forming part of the CoC, were getting 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 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).