In what may delay its plans to enter India, the Supreme Court on Friday halted ArcelorMittal from making Rs 42,000 crore payment to Essar Steel s lenders, Bloomberg reported. The apex court also directed to maintain status quo with respect to the NCLT s last order, the report added. With this order, ArcelorMittal will have to wait longer to acquire cash-strapped Essar Steel.
The NCLAT on Tuesday had said it may direct global steel major ArcelorMittal to deposit Rs 42,000 crore bid amount for acquiring Essar Steel in separate accounts during the next hearing scheduled on April 23.
A two-member bench headed by Chairman Justice S J Mukhopadhaya said that ArcelorMittal may have to deposit the money in a separate account either before the NCLAT or NCLT (National Company Law Tribunal) Ahmedabad-bench.
“Now, in light of the directions of the Supreme Court, the NCLAT will have to promptly decide whether the distribution of funds under the Resolution Plan amongst the various secured and unsecured financial creditors as well as the operational creditors is as per the IBC and other relevant Regulations, or not”, Punit Dutt Tyagi, Executive Partner, Lakshmikumaran & Sridharan Attorneys told Financial Express Online.
On March 8, the bankruptcy appellate tribunal had approved ArcelorMittal’s bid for Essar Steel, as per the decision of the Ahmedabad bench of the NCLT. It had directed global steel firm to deposit the bid amount with the Committee of Creditors (CoC).
The resolution plan for Essar Steel was involved in legal disputes for nearly two years and has surpassed the mandated 270 day period under IBC. Essar Steel owns a 10-million-tonne steel mill at Hazira in Gujarat. The Essar Steel case was among the first 12 cases selected by the Reserve Bank of India (RBI) to be resolved under the Insolvency and Bankruptcy Code (IBC).
Standard Chartered, an operational creditor and some others objected to lesser payment to them under the resolution plan submitted by ArcelorMittal.