NCLT moved against selecting Arcelor for Essar Steel

Standard Chartered Bank (SBC) has filed an interlocutory application in the bankruptcy court against a panel of lenders selecting ArcelorMittal to takeover debt-ridden Essar Steel, saying the decision was “illegal” and was taken without considering its claims.

SCB, which has more than 7.5% weightage in the Committee of Essar Steel Creditors, in the petition before the National Company Law Tribunal (NCLT) claimed that ArcelorMittal’s revised bid of Rs 42,000 crore was never considered by the CoC.

SCB had lent Essar Steel, which the lenders are auctioning to recover 49,395 crore of unpaid financial dues, a principal amount of Rs 2,646 crore but the Committee of Creditors (CoC) admitted only Rs 60.71 crore for repayment out of the auction proceeds.

“The manner of conducting the 21st CoC meeting dated October 22, 2018 and e-voting on the voting resolutions approved on October 24, 2018 and October 25, 2018 is non transparent, flawed and illegal and was carried out with an intention to deny legal right to (SCB) to take an informed decision on the Revised Resolution Plan (of ArcelorMittal),” the petition said.

It wanted quashing of the October 24-25 voting by more than 92% of creditors of Essar Steel in favour of handing over the company to ArcelorMittal. It also wanted rejection of the resolution plan of ArcelorMittal and if that was done, the Rs 42,000 crore proceeds be distributed among all financial creditors on pro-rata basis of the amount of claim.

Earlier this month, operational creditors filed separate applications seeking rejection of ArcelorMittal’s bid saying the Rs 42,000 crore project leaves out their claims.