The National Company Law and Appellate Tribunal (NCLAT) has accorded conditional approval to ArcelorMittal’s ₹42,000-crore bid to take over the stressed Essar Steel.
A two-member Bench headed by Justice SJ Mukhopadhaya said Essar Steel’s Committee of Creditors (CoC) can go ahead and implement the plan even as the Bench looks into the issue of distribution of funds between financial and operational creditors. It also directed the Insolvency and Bankruptcy Board of India to submit a ratio of distribution of funds between the creditors.
The Insolvency Resolution Professional will chair the monitoring committee and ensure the company remains a going concern, said the NCLAT on Monday.
Last Friday, it had turned down Essar Steel promoters’ plea to stay the approval given by the Ahmedabad Bench of the National Company Law Tribunal (NCLT) to ArcelorMittal’s bid even as the promoters offered to settle the firm’s entire ₹54,389-crore debt.
Following the NCLAT direction, the CoC, headed by the largest lenders Edelweiss ARC, SBI, IDBI Bank and ICICI Bank, is expected to meet and take a call on the suggestions made by the NCLT to set aside 10 per cent of the proceeds for operational creditors and consider Standard Chartered Bank as a financial creditor rather than an operational one.
If the lenders agree to the NCLT’s suggestions, they will receive only ₹34,000 crore, against the ₹42,000 crore proposed by ArcelorMittal, as the operational creditors will get ₹5,000 crore and StanChart will get ₹3,000 crore.