The National Company Law Tribunal on Tuesday rejected the settlement offer put forth by the promoters of Essar Steel Limited, saying the proposal violated a section of the Insolvency and Bankruptcy Code, Reuters reported.
The Ruia family made the offer on the day the Committee of Creditors approved ArcelorMittal’s resolution plan for the insolvent Essar Steel. The company’s debts amount to around Rs 49,000 crore. It is one of the first 12 companies referred by the Reserve Bank of India to be listed under the Insolvency and Bankruptcy Code in June 2017.
In October last year, steel manufacturing company ArcelorMittal said it had won a bid to acquire Essar Steel for more than Rs 42,000 crore. ArcelorMittal is owned by NRI billionaire Lakshmi Mittal.
The Ahmedabad branch of the tribunal said that an application for withdrawal of insolvency proceedings, under section 12A of the Insolvency and Bankruptcy Code, 2016, can be considered only if it is filed by the applicant who initiated the process in the first place. Lenders State Bank of India and Standard Chartered Bank had filed insolvency cases against Essar Steel.
A statement by the Essar Group said their settlement offer was better than that made by ArcelorMittal. “We continue to believe that our offer of Rs 54,389 crore is the most compelling proposal available to Essar Steel creditors,” a statement by the Essar Group spokesperson said.
ArcelorMittal termed the verdict as a “positive development for both Essar Steel India and for the country broadly”. “We welcome today’s ruling by the NCLT which protects the integrity of the IBC [Insolvency and Bankruptcy Code] and ensures its legitimacy as a rules based law,” the company said. “We hope now for a swift resolution to this case.”
The tribunal will hear the resolution plan submitted by ArcelorMittal from January 30.