ESSAR OPERATIONAL CREDITORS TO MOVE NCLT
Operational lenders seeking ~49.95 bn in dues
Operational creditors of Essar Steel are planning to move the National Company Law Tribunal this week, seeking dues worth ~49.95 billion from the company. The operational creditors include several centraland state-owned government entities. DEV CHATTERJEE & SHINE JACOB report
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 ~49.95billion dues from the company. The operational creditors include several centraland 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 ~420 billion upfront cash to the lenders as against ~490 billion of Essar Steel’s dues to banks. But ArcelorMittal’s plan offers ~2.14 billion to operational creditors, against ~49.95 billion of claims filed by them. Both Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) have been classified operational creditors in the Essar Steel case. According to the data submitted to the resolution professional, IOC’s outstanding dues aggregate to ~37.62 billion, while that of BPCL are ~2.61 billion. Thus, the total outstanding for stateowned oil refiners is around ~40.24 billion, which is around 80 per cent of the total outstanding operational credit of ~49.76 billion of Essar Steel.
“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 ~780 million, according to the plan cleared by the CoC, as against its dues of ~37.35 billion. StanChart has also moved the NCLT.
A last-minute ~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 ~9-billion from Bhushan Steel. The NCLAT had rejected L&T’s plea.