NCLAT Refuses To Stay ArcelorMittal’s Takeover Of Essar Steel

The appellate tribunal refused to stay the National Company Law Tribunal’s order approving ArcelorMittal’s bid to take over insolvent Essar Steel Ltd.

The two-judge bench of the National Company Law Appellate Tribunal said the resolution plan will be implemented subject to the final orders of the appellate tribunal.

The U.K.-based steelmaker will pay Rs 42,000 crore against financial creditors’ claims of more than Rs 49,000 crore.

The NCLAT in the last hearing had suggested the committee of creditors to consider giving operational creditors 10 percent of the total proceeds to settle claims. It also suggested the creditors to convene a meeting and discuss the suggestions.

The committee of creditors, however, informed the bench, comprising Retired Justice SJ Mukhopadhyay and Retired Justice Bansi Lal Bhat, that it “doesn’t agree with the suggestions”.

The appellate tribunal will hear appeal in the case on March 27. The bench also laid down the broad areas it will consider during the appeal:

• Whether operational creditors can be classified on the ground of related and unrelated parties
• Whether the resolution plan balances all stakeholders or is it discriminatory
• What about the contingent plan of operational creditors? Where are the disputes pending.

Essar Steel was one of the 12 large corporate accounts shortlisted for insolvency proceedings by the Reserve Bank of India in June 2017. State Bank of India and Standard Chartered Bank filed insolvency proceedings against the company at the Ahmedabad bench of the NCLT.

But repeated litigation by the promoter family, operational creditors and some financial creditors led to a considerable delay in the resolution process. The case has lingered for 583 days compared with the 270-day resolution period prescribed in the Insolvency and Bankruptcy Code.