The lenders of Essar Steel Wednesday informed the National Company Law Appellate Tribunal (NCLAT) that meeting of the Committee of Creditors of the debt-ridden firm is going on over distribution of Rs 42,000 crore coming from the resolution plan of global steel major ArcelorMittal.
"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 March 20 asked the resolution professional of Essar Steel to call for a fresh meeting of its CoC to reconsider distribution of Rs 42,000 crore fund.
The Appellate Tribunal also said that the March 8 order of the Ahmedabad-based bench the National Company Law Tribunal (NCLT) approving ArcelorMittal plan should be implemented in "letters and spirit".
During the proceedings of the appellate tribunal, 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 the Ahmedabad bench of the National Company Law Tribunal (NCLT).
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 & Bankruptcy Board of India (lBBI) Wednesday informed the ratio of distribution between financial creditors and the operational creditors in the resolution plan.
According to IBBI's counsel, In 88 cases that have seen successful resolution, financial creditors, on an average, have received 48.24 per cent of their claims. While the operational creditors have received 48.41 per cent of their claims, in the same number of cases.
On March 20, 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 per cent of its total dues from Essar Steel, while other financial creditors, forming part of the Committee of Creditors (CoC), were getting over 85 per cent of their dues.
ArcelorMittal's resolution proposal provides financial creditors Rs 41,987 crore out of their total dues of Rs 49,395 crore.
Operational creditors, under the plan, would get just Rs 214 crore against the outstanding of Rs 4,976 crore.
If the ArcelorMittal plan is implemented, Standard Chartered will only get Rs 60 crore against its claims of Rs 3,187 crore from Essar Steel.
Essar Steel owns a 10-million-tonne steel mill at Hazira in Gujarat.
This was 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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