NEW DELHI: Following several operational creditors challenging the decision of Essar Steel’s Committee of Creditors (CoC) to sell the debt-ridden steel major to ArcelorMittal at the National Company Law Tribunal (NCLT), Standard Chartered Bank (SCB) has followed suit.
The bank has filed an interlocutory application in the bankruptcy court saying the decision was “illegal” and was taken without considering its claims.
Last month, a committee of Essar Steel lenders picked ArcelorMittal’s Rs 42,000-crore proposal to take over the debt-laden company as the winning bid. ArcelorMittal had proposed paying Rs 41,987 crore out of Rs 49,395 crore in total dues owed to financial creditors. Operational creditors, under the plan, are to get just Rs 214 crore against the outstanding of Rs 4,976 crore.
Aggrieved by the decision over two dozen operational creditors filed separate interlocutory applications in the Ahmedabad-bench of NCLT. Their petition had demanded that ArcelorMittal pay in full all dues of operational creditors, or that the CoC consider a Rs 54,389 crore proposal made by Essar Steel’s owners.
Others like GAIL India Ltd and Gujarat Energy Transmission Corp (GETCO) had also filed separate applications seeking rejection of ArcelorMittal’s bid.
SCB, for its part, has more than 7.5 per cent weightage in the Committee of Essar Steel Creditors, and has pleaded before the NCLT that ArcelorMittal’s revised bid of Rs 42,000 crore was never considered by the CoC. “The manner of conducting the 21st CoC meeting dated October 22, 2018 and e-voting on the voting resolutions approved on October 24, 2018 and October 25, 2018 is non transparent, flawed and illegal and was carried out with an intention to deny legal right to (SCB) to take an informed decision on the Revised Resolution Plan (of ArcelorMittal),” the bank’s petition said.
SCB had lent Essar Steel a principal amount of Rs 2,646 crore but the CoC admitted only Rs 60.71 crore for repayment out of the auction proceeds, SCB stated. Consequently, SCB has pleaded for the quashing of the decision of CoC which had passed with 92 per cent of creditors of Essar Steel voting in favour of handing over the company to ArcelorMittal.
SCB also said the details of the Rs 42,000 crore revised resolution plan of ArcelorMittal, including the distribution among the creditors, was not circulated along with the agenda of the meeting. “It is an admitted position that the Revised Resolution Plan was never discussed in the CoC meetings, since there have been no CoC meetings on or after October 23, 2018 (when the Revised Resolution Plan was received),” it said.