The National Company Law Appellate Tribunal (NCLAT) on Wednesday asked the Ahmedabad bench of National Company Law Tribunal (NCLT) to pass appropriate orders in the Essar Steel insolvency case by January 31, failing which the appellate tribunal would take up the matter and pass orders in the case on February 4, when it will hear the matter. The NCLT bench of Ahmedabad has reserved its order on a maintainability plea moved by erstwhile promoters of Essar Steel who have offered to settle the debt by paying back all the creditors.
Appearing for ArcelorMittal, Senior Advocate Neeraj Kishan Kaul on Wednesday said that the Supreme Court’s order of October in the Essar Steel insolvency case had invoked Section 142 of Insolvency and Bankruptcy Code (IBC), which was for special circumstances and limited number of parties. Since Essar Steel Asia Holding Limited was not a party at that time, it should not be allowed to place any settlement bids now.
An Essar spokesperson, however, said the overriding objective of the IBC is maximization of recovery for creditors and this has been established time and again by courts at all levels. "Creditors of Essar Steel, including operational creditors, should not be forced to accept a resolution plan which undervalues the company and its assets,” the spokesperson said in a statement on Wednesday. The company claimed its bid of Rs 54,389 crore was higher by Rs 12,000 crore to the resolution plan approved by the creditors.
The committee of creditors had in October approved ArcelorMittal offer for Essar Steel. Opposing Essar Steel’s bid to settle the debt, an ArcelorMittal spokesperson had on Tuesday said that ample opportunities had been provided to bidders for nearly a year to be eligible and make a compelling offer.
“It appears there are certain parties in India who would like that the IBC not be implemented according to the law. The IBC was introduced for a very serious reason, to address a major problem with bad loans,” the spokesperson for ArcelorMittal had said. ArcelorMittal has offered to pay Rs 42,000 crore to the lenders of Essar Steel, along with Rs 8,000 crore as capital expenditure into the company.
Essar Steel promoters, on the other hand, have offered to pay Rs 54,389 crore to various creditors. The settlement offer, a company spokesperson said, has been made under the amended section 12 A of the Insolvency and Bankruptcy Code (IBC).
“Under the provisions of the IBC, a proposal made under Section 12 (A) is to be decided between the creditors of Essar Steel and the company. Creditors have already been provided all relevant information on the proposal. There is no requirement to provide any such details to a resolution applicant. It is, therefore, surprising to note comments made to the media by a resolution applicant regarding them not having received the details of the proposal,” the company’s spokesperson said.
The government had in August last year via an amendment introduced Section 12(A) of IBC under which it had allowed withdrawal of insolvency applications admitted under section 7 or Section 9 if at least 90% of the Committee of Creditors of that company approved the plan.
On October 4, the Supreme Court had asked ArcelorMittal and Numetal to pay their respective dues and resubmit resolution plans. It had also asked the NCLT to consider the bids by both the companies only after they had cleared their respective dues. Essar Steel owes around Rs 49,000 crore to its lenders.
Rewant Ruia, son of Ravi Ruia, one of the promoters of the Essar group, was one of the shareholders in Numetal when the first round of bids was placed. He later exited the company. In October 2018, Essar Steel promoters directly made an offer to the committee of creditors.