NCLAT declines to stay ArcelorMittal’s offer for Essar Steel

2019-03-18

Mar. 18, 2019 - The National Company Law Appellate Tribunal on Friday refused to stay the order of National Company Law Tribunal approving ArcelorMittal’s INR 42,000 crore resolution plan for Essar Steel, but sought a fresh plan for the distribution of bid amount between financial and operational creditors of the bankrupt firm. Asking the committee of creditors to bring a fresh distribution plan at the next date of hearing on March 18, the the two-member NCLAT bench, headed by its chairperson justice SJ Mukhopadhyay said that there cannot be any discrimination, all are equal and you cannot be a Shylock to have the full flesh. It also asked State Bank of India-led CoC to bring a fresh distribution plan at the next date of hearing

The NCLAT was of the view that the CoC cannot reserve 92% of the bid amount for financial lenders and leave just 4% for operational creditors. Operational creditors, it felt, are the oppressed lot and cannot be handed out just 4% of their outstanding. Making a suggestion, the NCLAT said all operational creditors below INR 1 crore should get 100% of the dues and so should the employees of Essar Steel. Only 90% of INR 42,000 crore should be allowed for financial creditors.

On Essar Steel’s directors complaint that they were never shown the resolution plan, the NCLAT said they should have pleaded this point before the resolution plan was approved. They said “Your time has gone. You had to cry at that time. You haven’t filed any appeal. It’s a rotten case.”