Banks, ArcelorMittal oppose Essar Steel proposal

Lender banks as well as the Lakshmi Mittal-led ArcelorMittal Monday opposed the debt settlement proposal made by the shareholders of Essar Steel, claiming that it is against the Supreme Court order as well as the provisions of the Insolvency and Bankruptcy Code (IBC).

The same stand was taken by the resolution professional of bankrupt Essar Steel, saying it is "too late" for Essar Steel Asia Holding, which holds 72 per cent shares in Essar Steel, to offer a settlement.

After taking into consideration the views by these parties during the hearing Monday, the Ahmedabad bench of the National Company Law Tribunal (NCLT), comprising adjudicating authority Manorama Kumari and Harihar Prakash Chaturvedi, kept further hearing on December 13.

The committee of creditors (CoC) had recently approved ArcelorMittal's Rs 42,000-crore bid for Essar Steel. The bid was approved after fresh tenders were invited following a directive from the Supreme Court in October.

Appearing for the lenders, senior counsel Ravi Kadam told the bench that the lender banks cannot go against the Supreme Court order and consider Essar Steel Asia Holding's fresh settlement offer.

"Banks are losing Rs 17 crore daily (on unpaid interest). We can't go on and on. Essar Steel Asia Holding's application is not maintainable. There is no point in arguing whether they can pay or have the money now. The committee of creditors can't take into consideration anything beyond the Supreme Court order," Kadam told the bench.

Appearing for ArcelorMittal, senior lawyer Abhishek Manu Singhvi said Essar Steel Asia Holding as 72 per cent shareholder, made no attempt to save the 10 million tonne per annum steel mill for 16 months.

"This offer is against the apex court order and the very IBC Act. The tribunal must reject their plea and give a strong message so that no one does such thing in the future" Singhvi said.

Senior counsel Darius Khambata, appearing for the resolution professional, told the bench that the new offer by Essar Steel promoters is "outside the scope".

"It's too late. My hands are tight, no matter how lucrative your offer is now" said Singhvi.