Essar Steel insolvency: Company says promoters' offer should not be ignored for process lacunae as ArcelorMittal emerges winner

New Delhi: With lenders picking ArcelorMittal for Essar Steel takeover, the debt-laden company on Friday said the committee of creditors should consider the Rs 54,389 crore offer made by promoters to clear all outstanding dues as it offers maximum value to all stakeholders and cannot be ignored citing some process lacunae. Essar Steel promoters had made the offer to pay Rs 54,389 crore to clear all outstanding, including of operational creditors on Thursday, the day when the Committee of Creditors (CoC) of the debt-laden company choose Rs 42,000 crore offer of ArcelorMittal. A company spokesperson said Section 12A of the Insolvency and Bankruptcy Code (IBC) that allows withdrawal of insolvency proceedings subject to approval by 90 per cent of the creditors and the National Company Law Tribunal (NCLT), was introduced in June 2018 and it was subsequently clarified through regulations that such an offer to withdraw should be made prior to floating of expression of interest (EoI) seeking bids for delinquent company. [caption id=“attachment_5135321” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] “In the current case Essar Steel was admitted into NCLT on 2 August, 2017 and EoI date was 20 October, 2017. Section 12A provision did not exist then. In the true spirit of the June 2018 amendment, an opportunity to withdraw from IBC process under Section 12A should not be denied to ongoing cases where EoI stage was over prior to this amendment,” the spokesperson said. He said there are instances in the context of IBC process where to aid the ultimate objective of maximisation of value and protection of interest of all stakeholders, CoC and judicial forums have made exceptions to the process. “Even in the case of Essar Steel, ArcelorMittal was given flexibility to cure their ineligibility by making payment of overdue of their related corporate debtors post submission of bid, keeping in mind maximisation of value so that all lenders dues could be cleared,” he said. By giving an opportunity to shareholders of Essar Steel to make an offer under Section 12A, the CoC will reinforce the objective of value maximisation in the interest of all the stakeholders. “An offer under Section 12A which is superior in all respects to the current ArcelorMittal proposal being considered, that offers maximum value to all stakeholders, including operational creditors and provides 100 percent repayment to the lenders, cannot be ignored citing some process lacunae,” he said. The spokesperson said this is not the first time that shareholders and management of Essar Steel have put forward a resolution plan. “The company was continuously approaching lenders for a restructuring proposal prior to it getting admitted into NCLT. Post-admission into IBC process also, the shareholders of Essar Steel have made offers to CoC in April 2018 and July 2018 offering a comprehensive resolution plan for ESIL. “Unfortunately on both the occasions our proposal was declined by CoC. We are now re-approaching CoC under 12A with a very compelling offer that is superior to any other resolution plan that CoC is considering, with full recovery for lenders and giving maximum realisation for all other stakeholders (primarily operation creditors),” he said.