India’s Appellate Tribunal approves ArcelorMittal’s £4.62bn resolution plan for Essar Steel

STEEL giant ArcelorMittal today (18) was given conditional approval by India’s National Company Law Appellate Tribunal (NCLAT) to proceed with its Rs 420 billion (£4.62bn) resolution plan for Essar Steel.

The tribunal also noted that its order will be subject to its final ruling on the petition filed by Ruia family, the promoters of the debt-ridden Essar Steel.

A two-member bench ruled that there was no stay on the Essar Steel resolution plan to disburse the funds among financial and operational creditors of the crisis hit steel firm.

"The resolution professional will be the chairperson of the monitoring committee and will act in accordance with law to ensure that the company is a going concern," the tribunal said.

The tribunal also added that it will also look at "unequal distribution" of funds between financial and operational creditors.

Earlier, Essar Steel directors questioned the Ahmedabad Bench of the National Company Law Tribunal's (NCLT's) ruling favouring ArcelorMittal's bid for the steel firm.

Essar's directors said their offer of £5.98bn was superior to that of Lakshmi Mittal's ArcelorMittal offer, as it cleared 100 per cent dues of both financial and operational creditors.

Standard Chartered had also moved the tribunal against the ArcelorMittal plan as the lender was being given 1.7 per cent of its total dues from Essar Steel.

The other financial creditors, forming part of the Committee of Creditors (CoC), were getting over 85 per cent of their dues.

If ArcelorMittal's plan is implemented, the proposal provides financial creditors £4.62bn out of their total dues of £5.44bn.

Operational creditors, under the plan, would get just 23.54million against the outstanding £547.38 million.

Standard Chartered will only get £6.60m against its claims of £350.58m from Essar Steel.