Twist in Essar tale: OCs oppose ArcelorMittal plan

Suresh Iyengar Ahmedabad/Mumbai | Updated on November 13, 2018 Published on November 13, 2018

Feel Essar Steel Asia Holdings’ offer of full settlement is a better deal

Even as the Ahmedabad Bench of the National Company Law Tribunal (NCLT) starts hearing the insolvency case against Essar Steel India Limited (ESIL) later this month, private sector operational creditors (OCs) have objected to the resolution plan submitted by global steel giant ArcelorMittal and requested the tribunal to consider Essar Steel Asia Holdings Limited (ESAHL)’s offer.

About 30 private OCs, most of which are based in Surat and Ahmedabad that have claims of over ₹600 crore, filed joint applications with the NCLT under section 60 (5) of IBC on Tuesday seeking to direct ESIL’s Committee of Creditors (CoC) to ensure full and equitable payment at par with financial creditors.

Alternatively, they requested the NCLT to consider the proposal submitted by ESIL shareholder ESAHL that has offered to settle the entire debt of ₹54,550 crore. This comes on the heels of petitions filed by ESIL’s unsecured creditors Standard Chartered Bank and Deutsche Bank.

Separately, Orissa Stevedores Limited, a cargo handling company which has claims of ₹20 crore, also filed an interlocutory application on Tuesday seeking to direct the CoC to consider the ESAHL proposal and not to implement any other resolution plan (the one submitted by ArcelorMittal) till the settlement proposal is considered by CoC. The combined value of the claims of these OCs exceeds ₹360 crore.

According to sources in the know, another application is to be filed by RK Logistics with claims of ₹226 crore, taking the total claims to ₹600 crore for these 30 OCs. This forms the part of the ₹5,059-crore outstanding for “OCs other than workmen and employees.”

ArcelorMittal, in its resolution plan, had offered ₹42,000 crore, which means a sizeable haircut not just for the OCs but also for the financial creditors, who have total claims of ₹49,473 crore. In its resolution plan, ArcelorMittal has offered to settle a total of ₹214 crore (mainly of the MSMEs), from the overall admitted claims of ₹4,995 crore of OCs. In such a scenario, most of the OCs having large claims, including the State and Central PSUs, stand to bleed heavily.

Meanwhile, ArcelorMittal’s proposal was reportedly supported by most of the members of CoC. In its application, Orissa Stevedores said the operational creditors who have exposure of over ₹1 crore will not get any money if the ArcelorMittal plan for acquiring Essar Steel is accepted.

Another applicant complained about the Resolution Professional not intimating them about the ArcelorMittal proposal, where most of the OCs stand to lose.

When contacted, ArcelorMittal refused to comment on the development.

Jalesh Grover, the resolution professional of GPI Textiles, a company promoted by Vinod Mittal — brother of ArcelorMittal’s promoter Lakshmi Mittal — has filed an interlocutory application at the Ahmedabad bench of the NCLT over reclaiming dues of ₹485 crore.

The NCLT is set to hear all the caveats in the case starting November 28.

Published on November 13, 2018
This article is closed for comments.
Please Email the Editor