Three directors of the erstwhile Essar Steel board approached the NCLAT and mentioned the matter before a two-member Bench headed by Chairman Justice SJ Mukhopadhaya.

Essar promoters move NCLAT against ArcelorMittal bid order
Atom Law Tuesday, March 12, 2019 - 11:53

Essar Steel promoters and the Standard Chartered Bank on Monday moved the National Company Law Appellate Tribunal (NCLAT) challenging the ArcelorMittal's resolution plan for bankrupt Essar Steel, which was approved on Friday.

Three directors of the erstwhile Essar Steel board approached the NCLAT and mentioned the matter before a two-member Bench headed by Chairman Justice SJ Mukhopadhaya. It may be taken up after the release of full written order by the NCLT Ahmedabad Bench.

On Friday, the Ahmedabad Bench of the bankruptcy court cleared ArcelorMittal's Rs 42,000 crore resolution plan for acquiring Essar Steel. It suggested to distribute the resolution amount in 85:15 ratio between financial and operational creditors.

Essar Steel promoters, in an effort to regain control over the 10 mtpa steel asset, had made a counter offer of Rs 54,389 crore, promising 100 per cent payment to all types of creditors, after the committee of creditors (CoC) okayed ArcelorMittal's bid last October.

The total claims admitted in Essar Steel's resolution process is Rs 54,389 crore, comprising Rs 49,395 crore of financial creditors and Rs 4,995 crore of operational creditors. But the NCLT rejected the offer citing Section 12A of the insolvency law.

"We continue to believe that our settlement proposal of Rs 54,389 crore is the most compelling one available to Essar Steel creditors and fulfils the IBC's declared overriding objective of value maximisation, which has been established time and again by courts at all levels," an Essar spokesperson said after the Friday judgment.

Another party raising objections against the NCLT's approval is the Standard Chartered Bank that has a claim of Rs 3,487 crore against insolvent Essar Steel. But as a second category secured creditor, it will get only Rs 61 crore under ArcelorMittal's resolution plan.

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