The stage is set for another round of legal battle, with operational creditors of Essar Steel
planning to move the National Company Law Tribunal (NCLT) this week, seeking Rs 49.95-billion dues from the company. The operational creditors include several central- and state-owned government entities.
ArcelorMittal, which has emerged the highest bidder for the company, has not included operational creditors in its debt resolution plan submitted to the committee of creditors (CoC), which has made the operational creditors wary about recovering their dues from the company.
On October 25, the CoC had approved a plan by ArcelorMittal, which had offered Rs 420 billion upfront cash to the lenders as against Rs 490 billion of Essar Steel’s dues to banks. But ArcelorMittal’s plan offers Rs 2.14 billion to operational creditors, against Rs 49.95 billion of claims filed by them.
“The operational credit for oil marketing companies
is mainly due to buying of gas from these marketing majors,” said an insider. When asked, IOC Chairman Sanjiv Singh said he was not aware of any outstanding dues from Essar Steel.
Standard Chartered (StanChart) Bank, another Essar Steel creditor, also raised objections to the ArcelorMittal plan, saying its dues have not been taken into account. The bank is getting only Rs 780 million, according to the plan cleared by the CoC, as against its dues of Rs 37.35 billion. StanChart has also moved the NCLT.
A last-minute Rs 543-billion plan by the Ruias offering full settlement to all creditors, including operational creditors, was not considered by the CoC on October 25, and lenders had already voted in favour of Arcelor’s offer. The Ruias’ offer will now also be placed before the NCLT for its consideration, said a source close to the development.
The operational creditors of Essar Steel are not the only ones moving the courts to recover their dues. Earlier, Larsen & Toubro (L&T) had moved the National Company Law Appellate Tribunal seeking its Rs 9-billion from Bhushan Steel. The NCLAT had rejected L&T’s plea.