Notwithstanding the imminent challenges, bankers involved in the Essar Steel debt resolution process are confident of shoring up their balancesheet this fiscal with ArcelorMittal’s winning bid of ₹42,000 crore.

On the contrary, the legal fraternity feels the judiciary does not necessarily work on bankers’ deadlines, and expects the case to end only in the June quarter.

The matter will come up for hearing at the National Company Law and Appellate Tribunal (NCLAT) on March 15, and aggrieved parties further have the liberty to move the Supreme Court.

Last Friday, the Ahmedabad Bench of the National Company Law Tribunal (NCLT) approved ArcelorMittal’s bid but had suggested that the Committee of Creditors (CoC) share 15 per cent of the bid amount with the operational creditors.

It also suggested that the CoC consider UK-based Standard Chartered Bank’s (SCB) claim as a financial creditor rather than classifying it as an operational creditor.

Bankers are awaiting the NCLT’s final order copy to comprehend the nitty-gritty.

In addition to the pending cases with the NCLAT, one of Essar Steel’s directors, Prashant Ruia, moved the Appellate Tribunal to quash the entire bidding process, saying it has not followed the Supreme Court’s direction to include the erstwhile suspended board in the resolution process.

StanChart’s plea

Separately, SCB has also moved the NCLAT, raising questions on the CoC’s decision to approve the lower bid of ArcelorMittal against the Essar Steel promoters’ plea to settle the entire debt of ₹54,000 crore.

“Though we will represent our case at NCLAT, there is no stay on the resolution per se,” said a senior bank official on condition of anonymity. He added that the banks “may set aside a part of money due to Standard Chartered” while the remaining would reach them by March 31. Under the final NCLT order, if banks have to accommodate operational creditors’ claims, a meeting of the CoC would be called, he added.

PSU exposure

One of the operational creditors is a public sector oil marketing firm which has an exposure of ₹400 crore, and it will not forego the amount, he further observed.

The long-drawn-out battle is likely to finally end up in the Supreme Court, and the lenders will have to explain why they have not considered the Ruias’ offer to pay the entire dues, said a corporate lawyer.

Bloomberg reports: Essar Steel’s lenders are considering increasing the payout to SCB to expedite the sale of the company to ArcelorMittal, according to sources.

The move by the lenders is part of an attempt to complete the sale by the end of March. SCB is opposing the sale to ArcelorMittal as, under the deal, it faces losing a substantial part of monies it has extended to Essar. SCB declined to comment and SBI didn’t respond to an email seeking comment.

The CoC will consider distributing nearly ₹3,000 crore to SCB and operational creditors, the sources said. While the exact amount that would go to the UK lender isn’t decided, the amount that the CoC had previously agreed to pay the bank was only ₹60 crore, they added.

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