Companies

Essar Steel: BPCL prefers liquidation over Arcelor plan

Ahmedabad/Mumbai | Updated on February 04, 2019 Published on February 04, 2019

GPI Textiles and Ruias, too, seek quashing of ArcelorMittal’s resolution proposal

Public sector oil refiner Bharat Petroleum Corporation Limited (BPCL) — one of the Operational Creditors (OCs) of the distressed Essar Steel India Limited (ESIL) — on Monday sought liquidation of the company objecting to ArcelorMittal’s resolution proposal, which is being considered by the Ahmedabad Bench of National Company Law Tribunal (NCLT).

In its arguments during the hearing of the ₹42,389-crore resolution plan submitted by LN Mittal-led ArcelorMittal, BPCL stated that ESIL’s former promoters under Essar Steel Asia Holdings Limited (ESAHL) had offered to pay the entire debt of ₹54,000 crore, which provides a possibility for OCs such as itself to get full recovery of dues.

Amount to be fetched

Notably, as per ArcelorMittal’s resolution plan, as an OC, BPCL having recoverable dues of ₹500 crore from ESIL for supply of liquefied natural gas, was not entitled to get anything. Counsel representing BPCL stated that there was no reason to believe that liquidation of ESIL will fetch not more than ₹15,000 crore.

BPCL counsel further stated that when the former promoter was ready to pay the entire debt of ₹54,000 crore as against what ArcelorMittal has offered, there is no reason that liquidation won’t fetch a lower amount. However, he expressed inability to ascertain the quantum of recovery from the liquidation either. “The liquidator will also invite bids and as an operational creditor I am willing to take that chance as I may get my full due,” BPCL’s counsel told the two-member Bench of NCLT comprising adjudicating authorities Harihar Prakash Chaturvedi and Manorama Kumari.

BPCL had a ‘take or pay’ contract and not in dispute, till the Resolution Professional (RP) deemed it to be so stating as Essar had not taken the gas, it was not entitled to pay. Counsel appearing for the RP challenged BPCL’s appeal saying that its claims of ₹500 crore did not fall under the purview of the resolution plan for want of being declared as a debt by any authority.

More twists to the tale

In yet another twist to the case, the counsel of resolution professional of LN Mittal’s brother Pramod Mittal-led GPI Textiles approached the NCLT Ahmedabad Bench seeking to quash ArcelorMittal’s resolution plan claiming that the former has outstanding dues to GPI Textiles worth ₹300 crore.

However, counsels of ArcelorMittal and Essar Steel RP objected to GPI Textiles’ plea, stating that its committee of creditors (CoC), in a written submission before NCLT Ahmedabad, had agreed to not seek such a quashing. The NCLT Ahmedabad has asked the RP of GPI Textiles to appear in-person before it on Tuesday and clarify his stance.

Fresh salvo by Ruias

Meanwhile, senior directors of Essar Steel, too, have filed an application in the NCLT seeking to quash ArcelorMittal bid claiming that the resolution professional has not followed the process set out by the Supreme Court.

The petition has also sought the copy of the approved ArcelorMittal plan. The fresh petition, which was filed on February 1 at NCLT, was moved by Prashant Ruia, Director, Dilip Oommen, former Managing Director of Essar Steel, and Rajiv Kumar Bhatnagar, former Project Director.

The petition says though Oommen and Bhatnagar were removed after the insolvency proceeding began, they still “continue to be part of the day-to-day management of Essar Steel and hold the designations of managing director and director (projects), respectively”.

The applicants also urged the tribunal to direct the resolution professional of Essar Steel to “convene a meeting of the committee of creditors, wherein the resolution plans submitted by the potential resolution applicants be deliberated and discussed afresh and thereafter voted upon.”

The case of Essar Steel, which runs a 10-million-tonne steel mill in Gujarat, has been going on for much beyond the mandated 270 days.

Published on February 04, 2019
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