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Essar Steel creditors move NCLT

29 operational creditors want lenders to consider counter offer made by the promoter Ruias

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A group of 29 operational creditors of Essar Steel have moved the National Company Law Tribunal (NCLT) demanding that the counter offer by Essar Steel promoters, the Ruias, be considered as they have offered to pay off all the financial as well as operational lenders.

The move may delay, if not altogether scrap, the takeover of Essar Steel by ArcelorMittal-Nippon combine.

The interlocutory application was made jointly by 28 operational creditors and another one separately by operational creditor Orissa Stevedores Ltd, which has admitted claims of about Rs 16 crore in outstanding from Essar Steel. The application also sought direction from NCLT to Essar Steel's Committee of Creditors to ensure full or equitable settlement of their dues, consider the resolution proposal submitted by promoter Essar Steel Asia Holdings and also direct the CoC to not take any further action for implementation of the takeover bid made by ArcelorMittal-Nippon consortium till the settlement proposal is considered.

The move by the operational creditors of Essar Steel was widely expected after a similar objection raised by operational creditors of Binani Cement when selected resolution applicant, Dalmia Bharat group led consortium, did not offer to settle all the dues of operational creditors.

The ArcelorMittal-Nippon Steel joint proposal approved by the CoC promises to pay the financial creditors in full while that of the promoters of Essar Steel, the Ruias, have promised to settle dues of the operational creditors as well.

Operational creditors of Essar Steel got admitted dues of Rs 5,058 crore though they have claimed an aggregate Rs 27,080 crore, according to the creditors list.

Such creditors, mostly suppliers of goods and services to the company, including several government owned entities, want their share in a way the operational creditors of Binani Cement have been demanding for long.

"The present application is filed considering that the CoC which consists of financial creditors hasn't considered the financial recovery of the operational creditors of ESIL while considering the settlement proposal and also while considering the resolution application of one ArcelorMittal," it said. The application claims that while operational creditors would be paid a consolidated amount of just Rs 214 crore under the proposal submitted by ArcelorMittal, the Essar promoters offered to settle their entire dues.

Last month, the CoC picked NRI billionaire Lakshmi Mittal-led ArcelorMittal's Rs 42,000 crore bid for takeover of Essar Steel. This after it ignored the Settlement Proposal of Essar Steel Asia Holding Ltd (ESAHL) — the promoter of Essar Steel — to pay Rs 54,389 crore to all clear all dues of the financial and operational creditor in a last-ditch effort to avert losing their flagship company.

LONG-DRAWN PROCESS

  • Rs 27,080 cr – aggregate dues claimed by operational creditors
     
  • Rs 5,058 cr – admitted dues of operational creditors
     
  • Rs 214 cr – operational creditors would get under ArcelorMittal bid
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