Electrosteel sale status quo hurting banks, lift stay: Vedanta to NCLAT

Vedanta Ltd on Monday asked the National Company Law Appellate Tribunal (NCLAT) to vacate its order for maintaining status quo over the sale of debt-ridden Electrosteel Steel.

During the proceedings of the appellate tribunal, senior advocate C A Sundaram appearing for Vedanta Ltd said that status quo is causing losses to the banks involved.

The NCLAT bench, headed by Justice S J Mukhopadhaya, has directed to list the matter tomorrow and would hear it continuously for three days till May 31.

On May 17, NCLAT admitted the petition of Renaissance Steel challenging Vedanta's bid for debt-ridden Electrosteel.

Renaissance Steel's resolution application was rejected by the Committee of Creditors (CoC) of Electrosteel Steels.

On May 1, NCLAT had directed to maintain status quo in the case pertaining to the sale of debt ridden Electrosteel Steels to Vedanta Ltd.

Renaissance has submitted before NCLAT that Vedanta is not eligible to bid for Electrosteel under section 29 A of the Insolvency & Bankruptcy Code as one of Vedanta's affiliates in Zambia a unit of its UK-based parent Vedanta Resources Plc had been found guilty of criminal misconduct.

It also raised an objection against CoC's decision to not allow it to participate in the meeting in which the successful bidder was decided.

The NCLT had last month approved the resolution plan submitted by Vedanta Ltd for Electrosteel Steels, making it the first among 12 large stressed accounts identified by RBI last year to get resolved under the Insolvency and Bankruptcy Code.

The resolution plan involved close to Rs 53 billion cash payout and a haircut of 60 per cent of the total banks' debt.

Electrosteel Steels owes lenders more than Rs 130 billion, of which about Rs 50 billion is to State Bank of India alone.

Vedanta had said in a statement earlier that "one of its wholly-owned subsidiaries will subscribe to the share capital of Electrosteel for an aggregate amount of Rs 18 billion (USD 275.7 million) and provide additional funds aggregating to Rs 35.15 billion (USD 536.9 million) by way of debt".

"Upon implementation of the Resolution Plan, the company will hold approximately 90 per cent of the paid up share capital of Electrosteel," it had said.