The National Company Law Tribunal (NCLT), Ahmedabad bench, on Tuesday rejected the Essar promoters plea to repay their debt and withdraw Essar Steel from the insolvency proceedings, giving advantage to ArcelorMittal in the race.
Within days of the Supreme Court ruling on Section 12A of the Insolvency and Bankruptcy Code (IBC) clarifying that promoters can take back control of their insolvent company with the approval of 90 per cent creditors' vote share, the tables have turned for Essar promoters.
The two-member Ahmedabad bench, which on January 7 had reserved its judgement on the maintainability of Essar's arm Essar Steel Asia Holdings Ltd (ESAH) seeking withdrawal from the resolution process, gave its verdict on Tuesday rejecting the promoter's plea.
The NCLT also said that there is no illegality in the decision taken by the Committee of Creditors (CoC) on selecting ArcelorMittal.
The bench said only the applicant who had initiated the insolvency proceedings can seek a withdrawal. The State Bank of India and Standard Chartered Bank had moved the bankruptcy court against Essar Steel.
ESAH had offered to pay Rs 54,389 crore for settlement to retain its control of the company after ArcelorMittal's proposal of Rs 42,202 crore was approved by the CoC. Now, the NCLT will decide on the resolution plan of ArcelorMittal on January 31.
"We welcome today's ruling by the NCLT which protects the integrity of the IBC and ensures its legitimacy as a rules based law. This is a positive development for both Essar Steel India and the country more broadly. We hope now for a swift resolution to this case," ArcelorMittal said in a statement.
While this may finally close the insolvency proceedings in favour of ArcelorMittal, the Essar Group maintains that their offer is better as it can pay all the creditors and that the objective of the IBC is value maximisation.
"We continue to believe that our offer of Rs 54,389 crore is the most compelling proposal available to Essar Steel creditors. It seeks to repay all classes of creditors and fulfils the IBC's overriding objective of value maximisation that has been established time and again by courts at all levels.
"We submitted the proposal under the recently introduced Section 12A of the IBC and the recent judgement of the Supreme Court has established that the section's provisions are applicable retrospectively," Essar Group said in a statement hinting at the recent Supreme Court clarification allowing promoters to withdraw from the insolvency process at any stage.
"We are awaiting a copy of the full NCLT order, and will take a call on next steps after we have thoroughly gone through the contents," Essar said.
It is likely that the Ruias will now approach NCLAT or even move the Supreme Court against the NCLT's order rejecting their plea.
--IANS
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