On Monday, at the National Company Law Tribunal (NCLT), it declared a right to do so as a shareholder, and challenged the non-maintainability claim against its debt settlement proposal worth Rs 543.89 billion on behalf of Essar Steel. The hearing continues on Tuesday.
Mihir Joshi, senior counsel of Essar Steel Asia Holding Ltd (ESAHL), invoked Section 60 (5) of the Insolvency and Bankruptcy Code (IBC). Doing so, he argued the recent Supreme Court (SC) order directing NCLT to consider the Resolution Plans (RPs) of ArcelorMittal (AM) or Numetal (subject to payment of dues) could not be interpreted as restricting Essar's debt settlement proposal.
On October 4, the apex court had ordered AM and Numetal to re-present their RPs and directed NCLT to consider these. Ruling that if these were found not eligible, the assets were to go into liquidation.
“In the SC order, the reading that no other RP or application should be considered does not occur, let alone be interpreted. And, hence, it does not do away with my rights. There is no direction given by the SC that only one route (be considered) and none other. In the SC order, there is no question of adjudicating the third party,” argued Joshi.
He added that since the SC ruling did not bring the issue of the right of a borrower, this was now being invoked by ESAHL.
"Wherever I assert my right, it can only be adjudicated and not held non-maintainable. As per the SC order, it never brought the right of borrower in the judgment because it was never raised. Given our right, we are not making an RP; instead, a debt restructuring settlement proposal. The SC has not made a direction but only observed that in case of no plan being approved, the company be liquidated. It is not a direction to consider only the RPs. But, the assertion of our settlement proposal comes even before a RP is considered and this is not covered by the SC order,” Joshi argued.
To which, the NCLT bench of Harihar Prakash Chaturvedi and Manorama Kumari asked ESAHL why it had not invokeed earlier this right for redemption, before either the NCLAT, the Gujarat high court or the SC? To this, Joshi argued that under the IBC, till the company was sold, the rights to redemption of a shareholder stood intact and could be invoked anytime.
The holding company also claimed it had approached Essar Steel's CoC and the RP several times but got no positive response.
Arguing the company was now not only doing better and had a chance to revive itself but also that its settlement proposal was valued higher than the RP placed by ArcelorMittal, ESAHL urged NCLT to offer "fair consideration".
ESAHL had made the debt settlement proposal of Rs 543.89 bn on the day the lenders voted in favour of ArcelorMittal’s Rs 420-billion offer. Under the latter plan, the financial creditors get Rs 419.87 billion from their total dues of Rs 494 billion. The operational creditors will get Rs 2.14 billion, against their dues worth Rs 49.76 billion.
Earlier, CoC and ArcelorMittal's senior counsels argued that ESAHL's proposal was not maintainable.
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