NCLAT gives conditional nod to ArcelorMittal's Rs 42,000 crore resolution plan for debt-ridden Essar Steel

NCLAT said there is no stay on the Resolution Professional of Essar Steel to disburse the funds among financial and operational creditors of the company

Press Trust of India March 18, 2019 16:05:44 IST
NCLAT gives conditional nod to ArcelorMittal's Rs 42,000 crore resolution plan for debt-ridden Essar Steel
  • NCLAT said it will also look into the issue of discriminatory distribution of the funds between financial and operational creditors

  • NCLAT asked IBBI to submit a ratio of distribution of funds between financial and operational creditors

  • Essar Steel directors had challenged the Ahmedabad-bench of NCLT nod to ArcelorMittal SA's bid for the debt-laden company

New Delhi: The National Company Law Appellate Tribunal (NCLAT) Monday gave conditional approval to Rs 42,000 crore resolution plan of ArcelorMittal for debt-ridden Essar Steel saying it will be subject to its final order in the appeal filed by the promoters.

A two-member bench headed by Justice SJ Mukhopadhaya said there is no stay on the Resolution Professional of Essar Steel to disburse the funds among financial and operational creditors of the company.

"The resolution professional will be the chairperson of the monitoring committee and will act in accordance with law to ensure that the company is a going concern," the tribunal said.

NCLAT gives conditional nod to ArcelorMittals Rs 42000 crore resolution plan for debtridden Essar Steel

Representational image. Reuters.

The appellate tribunal also said it will also look into the issue of discriminatory distribution of the funds between financial and operational creditors.

It has also asked the Insolvency & Bankruptcy Board of India (IBBI) to submit a ratio of distribution of funds between financial and operational creditors.

Essar Steel directors had challenged the Ahmedabad-bench of National Company Law Tribunal's (NCLT) nod to global steel giant ArcelorMittal SA's bid for the debt-laden company on the plea that their offer of Rs 54,389-crore was superior as it clears 100 percent outstanding of both financial and operational creditors.

Standard Chartered too moved the NCLAT against the plan as its counsel contended that the bank was being given only 1.7 percent of its total dues from Essar Steel, while other financial creditors, forming part of the Committee of Creditors (CoC), were getting over 85 percent 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.

Updated Date:

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