NEW DELHI: After lingering for 583 days, the National Company Law Tribunal (NCLT) on Friday has finally given its blessing to the resolution plan put in place by ArcelorMittal to take over the debt-laden Essar Steel. The current offer of Rs 42,000 crore from ArcelorMittal entails a haircut of about 14 per cent for the financial creditors of the insolvent firm. The bidder will also clear dues of operational creditors to take over the assets. Currently, Essar Steel’s operational creditors with large dues include IndianOil with over Rs 3,500 crore of dues.
Post the judgement, experts say that banks can now kiss goodbye to the bad loans, at least this painfully large one. “Being an all-cash deal, unlike most other cases under insolvency, this development is a win-win for bankers who stand to gain the most,” said an expert. SBI, which had put on block `15,341-crore loans of Essar, is also considering pulling back the auction. “We’ll abide by the NCLT order and move ahead with the resolution plan submitted by ArcelorMittal,” said a top SBI official.
The tribunal, while delivering the verdict, said that it cannot impose judicial view over banks’ wisdom. However, it asked the Committee of Creditors (CoC) to reconsider distribution of dues, suggesting that lenders give 15 per cent of the total corpus to the operational creditors of Essar. The CoC is likely to meet next week, after receiving a copy of the NCLT order on Monday, to decide on this issue.
ArcelorMittal, which is set to foray into India with this acquisition if there are no further hurdles, said, “...While we will need to review the full written order once it becomes available, we hope to complete the transaction as soon as possible.” But, Ruias are still not ready to throw in the towel yet.
“We continue to believe that our settlement proposal of `54,389 crore is the most compelling one available to Essar Steel creditors and fulfills the IBC’s declared overriding objective of value maximisation…,” an Essar spokesperson said, adding they are confident of the legal validity of their offer.