Essar Steel insolvency case: SC stops ArcelorMittal’s Rs 42,000 crore payment bid – The Financial Express

The appellate tribunal on March 18 had refused to stay the NCLT’s order approving ArcelorMittal’s bid to take over Essar Steel.

The Supreme Court on Friday asked Essar Steel’s resolution professional (RP) to maintain status quo with regard to distribution of ArcelorMittal’s bid amount of Rs 42,000 crore between financial and operational creditors.

A Bench led by justice RF Nariman clarified that “it is not necessary to carry out the order” with regard to distribution of funds, referring to the NCLT’s March 8 order which had approved ArcelorMittal’s bid for Essar Steel. However, it directed the National Company Law Appellate Tribunal (NCLAT) to dispose of the case on the distribution of the bid sum expeditiously.

Earlier this week, the NCLAT had said that ArcelorMittal may be asked to deposit the money in an escrow account either with it or the NCLT, Ahmedabad. The appellate tribunal on March 18 had refused to stay the NCLT’s order approving ArcelorMittal’s bid to take over Essar Steel.

It had directed lenders to jointly consider redistribution of Rs 42,000 crore as per the March 8 order of NCLT, Ahmedabad, had suggested an 85:15 distribution between the financial and operational creditors.

The NCLAT has directed lenders to consider a higher payout to unsecured creditor Standard Chartered Bank (SCB), which had claimed the biggest amount of around Rs 3,500 crore. As of now, the foreign bank is set to receive only Rs 60.71 crore or 1.7% of the admitted claims under the approved ArcelorMittal resolution plan.

The apex court was on Friday was hearing three appeals by the committee of creditors of Essar Steel, SBI and ICICI Bank which had claimed that it was outside the appellate tribunal’s jurisdiction to ask the creditors’ panel to reconsider hiking the share of SCB.

State Bank of India had opposed the NCLAT’s recommendation to give more money to SCB on the grounds that the private bank is not a secured creditor and so should not be allowed to make any additional claim from ArcelorMittal’s Rs 42,000-crore offer.

SCB has filed a claim of Rs 3,487 crore against the embattled firm. SBI said the NCLAT cannot pressure the lenders to pay unsecured creditors more than they are inclined to.

SCB, which was asked to take a 98% haircut, as opposed to other banks taking haircuts of around 8%, had opposed the release of funds till the case is finally settled. While the CoC at its meeting in March-end had agreed to give another Rs 1,000 crore to operational creditors as against Rs 214-crore repayment decided earlier, it had rejected to pay anything extra to SCB.

The PSU lender further said the appellate tribunal “grossly erred in not appreciating that it was not open to ArcelorMittal to have offered and for the Core Committee and others to have accepted an upfront payment amount which is lesser than its commitment made before the apex court”.

Even ICICI Bank told the apex court that the NCLAT had failed to appreciate that the inclusion of Rs 2,500 crore in the upfront package is a “facade only to make a show that the figure of Rs 42,000 crore has not been diluted”.

Essar Steel was among the 12 companies referred by the RBI for Insolvency proceedings. The total of claims admitted by the financial creditors in Essar Steel are Rs 49,479 crore.

via Essar Steel insolvency case: SC stops ArcelorMittal’s Rs 42,000 crore payment bid – The Financial Express

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