Essar Steel insolvency: GAIL, GETCO move NCLT seeking rejection of ArcelorMittal's takeover bid

Last month, a committee of Essar Steel lenders picked ArcelorMittal's Rs 42,000-crore proposal to take over the debt-laden company by paying Rs 41,987 crore out of total dues of Rs 49,395 crore of financial creditors. Operational creditors, under the plan, are to get just Rs 214 crore against the outstanding of Rs 4,976 crore.

Press Trust of India November 19, 2018 20:34:05 IST
Essar Steel insolvency: GAIL, GETCO move NCLT seeking rejection of ArcelorMittal's takeover bid

Ahmedabad: State-run gas utility GAIL (India) and Gujarat Energy Transmission Corp (GETCO) have moved the National Company Law Tribunal (NCLT) seeking rejection of ArcelorMittal's Rs 42,000-crore takeover plan for Essar Steel, saying operational creditors have been left out in the proposal.

Last month, a committee of Essar Steel lenders picked ArcelorMittal's Rs 42,000-crore proposal to take over the debt-laden company by paying Rs 41,987 crore out of total dues of Rs 49,395 crore of financial creditors. Operational creditors, under the plan, are to get just Rs 214 crore against the outstanding of Rs 4,976 crore.

Aggrieved by ArcelorMittal's resolution plan, GAIL and GETCO filed separate interlocutory applications in the Ahmedabad-bench of NCLT saying they have claims of over Rs 1,800 crore against Essar Steel India, which are not being fully cleared.

Essar Steel insolvency GAIL GETCO move NCLT seeking rejection of ArcelorMittals takeover bid

Representational image. Reuters.

GAIL in the 16 November application said it has a claim of Rs 907.20 crore towards non-offtake of gas that it had signed for under a take or pay agreement. Of this, about Rs 125 crore has already been admitted in the list of creditors of the company.

"The resolution plan submitted is in contravention of Section 30 (2) of Insolvency and Bankruptcy Code (IBC) 2016. That even otherwise resolution plan is neither legal nor proper in the interest of all creditors," it said calling the resolution plan "arbitrary, irrational, illogical that puts in jeopardy the interest of operational creditors."

Stating that the resolution plan "completely fails to protect the interest of operational creditors", the GAIL petition sought rejection of the ArcelorMittal proposal.

GETCO, which wheeled power for the company, in a separate petition sought a direction to include its entire claim of Rs 896.52 crore and rejection of the resolution plan in case this is not met.

"The resolution plan is not in accordance with the provision of the IBC, 2016 and IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as it does not reflect the crystallised and legally adjudicated debt/liability of the corporate debtor," it said seeking rejection of the plan.

Last week, as many as 29 operational creditors of Essar Steel had filed petitions in NCLT pleading that the debt settlement proposal made by shareholders of Essar Steel be considered as it would pay off all outstanding of both financial and operational creditors.

The 29 operational creditors, which have about Rs 381 crore in outstanding dues from Essar Steel, wanted ArcelorMittal -- which the lenders have picked to take over the debt-ridden firm -- to pay in full to all operational creditors or allow consideration of the Rs 54,389 crore proposal of the owners of Essar Steel to be considered.

Essar Steel Asia Holding Ltd (ESAHL) -- the promoter of Essar Steel -- has proposed to pay Rs 54,389 crore to clear all dues of the financial and operational creditor in a last-ditch effort to avert losing their flagship company.

"NCLT does not act as a post office to merely put a seal of approval on the resolution plan cleared by Committee of Creditors. NCLT is compliance of Act and rules and interest of all sets of creditors and if that is not done, NCLT may refuse to put a seal of approval on resolution plan.

"On the other side, if the resolution plan goes through NCLT, it will bind everyone. Thus, the scrutiny by NCLT of the objections raised by all stakeholders is very crucial and important," GAIL said in the petition.

An ArcelorMittal spokesperson said: "We have followed the IBC process in good faith since first submitting our EOI in 2017. The committee of creditors has clearly decided ArcelorMittal's plan is in the best interests of Essar Steel and we are confident that the process will be implemented correctly and according to the law."

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Essar Steel insolvency: ArcelorMittal aims to complete acquisition of debt-ridden company by 2019-end
Business

Essar Steel insolvency: ArcelorMittal aims to complete acquisition of debt-ridden company by 2019-end

Following the Supreme Court verdict on Essar Steel resolution plan, global steel giant ArcelorMittal said it expects to complete the acquisition of the debt-ridden company by the end of this year

Essar Steel insolvency: SC paves way for ArcelorMittal to take over debt-laden company for Rs 42,000 cr
Business

Essar Steel insolvency: SC paves way for ArcelorMittal to take over debt-laden company for Rs 42,000 cr

The Supreme Court on Friday set aside the 4 July order of the NCLAT approving ArcelorMittal's Rs 42,000-crore bid for acquiring debt-laden Essar Steel

Essar Steel insolvency case: Majority shareholders seek rejection of ArcelorMittal's Rs 42,000 crore bid
Business

Essar Steel insolvency case: Majority shareholders seek rejection of ArcelorMittal's Rs 42,000 crore bid

An Essar Steel's majority shareholder Tuesday moved NCLAT seeking rejection of ArcelorMittal's Rs 42,000 crore bid of the bankrupt company, alleging that its promoter Lakshmi Mittal hid his association with loan defaulting firms run by his brothers, that made his firm ineligible to participate in insolvency proceedings