Despite ArcelorMittal’s ₹42,000-crore bid being declared the top one for Essar Steel, lenders will not get the money before March 31.
That’s because the Committee of Creditors (CoC), which met on Wednesday, is yet to decide on how to distribute the money between operational and financial creditors.
The lenders today told the National Company Law Appellate Tribunal (NCLAT) that a decision by the CoC will come only by Friday.
The Appellate Tribunal has scheduled the case for next hearing on April 9.
“We have to see the outcome of the CoC meeting,” said a two-member NCLAT Bench headed by Chairman Justice SJ Mukhopadhaya. The NCLAT had on March 20 asked Essar Steel’s Insolvency Resolution Professional (IRP) to call for a fresh meeting of its CoC to reconsider the distribution of ₹42,000 crore.
While the lenders were hoping to recover the money before the end of the fiscal, legal experts said the judiciary does not necessarily work on bankers’ deadlines. They expect the case to end only in the June quarter.
The Ahmedabad Bench of the National Company Law Tribunal (NCLT) had recently approved ArcelorMittal’s bid but had suggested that the 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.
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.
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.
Essar Steel’s lenders were considering increasing the payout to SCB to expedite the sale of the company to ArcelorMittal, according to sources. 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.
Legal wrangle
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.