Insolvency proceedings: Electrosteel RP files Vedanta's resolution plan

The counsel of Renaissance Steel India raised objections to the decision of the CoC on the eligibility of Tata Steel and Vedanta

Electrosteel Steels’ resolution professional on Monday filed Vedanta’s resolution plan with the National Company Law Tribunal’s (NCLT’s) Kolkata Bench after the committee of creditors (CoC)declared it a successful applicant.

Renaissance Steel India will file an application raising objections to the decision of the CoC on the eligibility of Tata Steel and Vedanta. It will also oppose the resolution plan of Vedanta. 

The matter will be heard on Wednesday. However, there is no stay on the procedure of the application.

Among the Reserve Bank of India’s (RBI’s) first list of 12 non-performing assets, Electrosteel will be the second case where the resolution plan has been filed with the NCLT for approval, the first being Tata Steel’s for Bhushan Steel.

Vedanta had informed the stock exchanges on March 31 that it had been declared a successful resolution applicant, following which it had received a letter of intent for Electrosteel Steels. Though Vedanta had not disclosed the bid value, it was believed to have offered Rs 55 billion. Electrosteel owes Rs 103 billion to banks.

However, the eligibility issue is likely to be an overhang on Electrosteel. Renaissance had challenged the eligibility of Tata Steel and Vedanta under Section 29A of the Insolvency and Bankruptcy Code (IBC). According to it, Tata Steel UK, was found guilty of an industrial accident and Konkola Copper Mines, a subsidiary of Vedanta Resources, of pollution in Zambia. Thus, both were ineligible to bid for the stressed assets. Renaissance Steel India was also a bidder for Electrosteel.

When Renaissance had first moved the NCLT challenging the eligibility, the Kolkata Bench had given specific directions. In the first step, the resolution professional was to give reasons for the decision of eligibility of Vedanta and Tata Steel to Renaissance Steel India, the applicant, in three days. 

Renaissance was allowed to submit its reply or objections in three days. 

And, finally the resolution professional was directed to place all the objections of the applicants with supporting documents before the CoC with a copy of the NCLT order for its independent consideration. The CoC, hence, after an independent consideration on eligibility, declared Vedanta a successful resolution applicant by consensus on March 29.