The Supreme Court on Wednesday gave a week’s time to the operational creditors of bankrupt Essar Steel to challenge the new amendments to the Insolvency and Bankruptcy Code, which granted more powers to the lenders. A bench led by justice RF Nariman deferred the hearing on a batch of appeals till August 19 so as to decide the issue in light of fresh challenges following recent amendments.
The Supreme Court Monday put on hold the sale of Essar Steel to ArcelorMittal as it agreed to hear the appeal filed by financial lenders against the NCLAT order, saying it would like to settle the issue “once and for all”. A bench of Justices R F Nariman and Surya Kant said the monitoring committee will continue its work till the case is heard on August 7.
ArcelorMittal, which was declared the highest bidder for debt-laden Essar Steel, on Thursday moved the Supreme Court against a part of the order of the National Company Law Appellate Tribunal (NCLAT) which had ruled that the profit of Rs 3,495 crore generated during the corporate insolvency resolution process cannot be given to it.
The appellate tribunal had held that the profit should be distributed among all the financial and operational creditors on a pro-rata basis of their claims.
India’s insolvency tribunal has made a dangerous decision. Unless its judgment is quashed, credit costs for India Inc will surge, shares of state-run banks will swoon and foreign investors will flee.
The case concerns the country’s most high-profile bankruptcy, Essar Steel India Ltd. Insolvency judges recently ruled that creditors whose claims are backed by collateral won’t get preferential treatment in the $6 billion sale of the company’s plant to ArcelorMittal.
The State Bank of India-led committee of creditors (CoC) of the debt-laden Essar Steel on Friday approached the Supreme Court, challenging last week’s National Company Law Appellate Tribunal (NCLAT) order that reduced its share of the sale proceeds from 90% to 60%, apart from putting the operational creditors at par with financial creditors in terms of settlement of claims.
The State Bank of India-led committee of creditors (CoC) of debt-laden Essar Steel is likely to move the Supreme Court on Friday against the National Company Law Appellate Tribunal’s (NCLAT) order that reduced their share of the sale proceeds and also put the financial creditors and operational creditors at par in settlement of claims.
ArcelorMittal’s `42,000-crore resolution plan for Essar Steel was on Thursday approved by the National Company Law Appellate Tribunal (NCLAT), but lenders are staring at a `20,000-crore hit after the appellate tribunal said operational creditors be given 60.7% of their admitted claims.
The lenders are expected to challenge the decision on the distribution of funds in the Supreme Court.
The National Company Law Appellate Tribunal (NCLAT) on Thursday approved Lakshmi Mittal-led ArcelorMittal’s plan for Essar Steel India Limited. The appellate tribunal had on May 21 heard the contentions of all the parties and reserved its judgment in the case. The distribution of amount for all operational and financial creditors will be reflected in ArcelorMittal's resolution plan.
Still in the throes of an insolvency resolution, Essar Steel is in a tight spot for failing to develop over 1,000 acres of land at Paradip (Odisha) where it initially proposed a six million tonne greenfield steel mill.
To facilitate the setting up of the steel plant, the Odisha government through its agency for land acquisition- Odisha Industrial Infrastructure Development Corporation (Idco) had acquired 1,262 acres of land, of which 1,123 acres were private and around 100 acres were government-owned.
Hearing a bunch of petitions against the March 8 order of the National Company Law Tribunal (NCLT) approving ArcelorMittal’s Rs 42,000-crore resolution plan for the debt-ridden Essar Steel, the National Company Law Appellate Tribunal (NCLAT) on Tuesday reserved its order. The two-member bench, headed by Chairman Justice SJ Mukhopadhaya, has heard all parties, including the erstwhile promoters of Essar Steel and a host of operational creditors over the period.
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