NCLAT may ask ArcelorMittal to deposit Rs 42,000 cr bid amount for acquiring Essar Steel

The National Company Law Appellate Tribunal Tuesday said it may direct global steel major ArcelorMittal to deposit Rs 42,000 crore bid amount for acquiring Essar Steel in escrow accounts during next hearing on April 23. A two-member bench headed by Chairman Justice S J Mukhopadhaya said that ArcelorMittal may have to deposit the money in a escrow account either before the NCLAT or NCLT Ahmedabad-bench.

The bench also asked ArcelorMittal to file an affidavit before it, detailing the steps to be taken for implementation of the resolution plan of debt ridden Essar Steel. "ArcelorMittal India, successful resolution applicant, would file an affidavit for implementation of plan," the bench said.

It further said, "The Appellate Tribunal may direct the successful resolution applicant to deposit money in an (escrow) account in next date of hearing". During the proceedings the NCLAT Chairman asked ArcelorMittal about delay in making payment as the loss making company has to remain a going conern.

"Why the plan being not implemented," the bench asked. On this senior advocate Neeraj Kishan Kaul, representing ArcelorMittal, informed the bench that the company was ready to bring the money but CoC has to execute debt assignment agreement in the favour of the company.

"COC has to issue a debt assignment execution in our favour," Kaul said adding "there is some sort of reluctance from the part of lender to execute the agreement". The bench said that the original plan approved by NCLT Ahmedabad has to be implemented.

The NCLAT has also directed the operational creditors and financial creditors of Essar Steel to file a chart next week, detailing their claims approved by resolution professional and CoC. "Financial creditors and operational creditors are allowed to file one page affidavit giving details of their claims approved by RP and its percentage," it said.

Moreover, it has also asked the Gujarat State Tax department to file an affidavit over its claims. The NCLAT has also directed the Committee of Creditors (CoC) to submit the outcome of the meeting to reconsider distribution of funds.

The CoC informed the bench that it has decided to allow an additional payment of Rs 1,000 crore to the operational creditors of the company but not additional to Standard Chartered bank. On March 20, NCLAT had asked the RP of the company to call for a fresh meeting of its CoC to reconsider distribution of Rs 42,000 crore fund.

The NCLAT was hearing a batch of petitions filed by operational creditors, Gujarat State Tax department and others. ArcelorMittal's resolution proposal provides financial creditors Rs 41,987 crore out of their total dues of Rs 49,395 crore.

Operational creditors, under the plan, will get just Rs 214 crore against the outstanding of Rs 4,976 crore and are contesting before the NCLAT. Essar Steel owns a 10-million-tonne steel mill at Hazira in Gujarat.

This was was among the first 12 cases selected by the Reserve Bank of India to be resolved under the Insolvency and Bankruptcy Code (IBC).

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