FE : Essar Steel case: Standard Chartered delaying insolvency process, CoC tells NCLT

9 February 2019: Rejecting all charges made by SCB counsel, including that of conspiracy against SBC and entire process of resolution plan as a ‘big scam’, the CoC counsel said that decision on distribution plan was taken on best commercial wisdom of CoC.

Standard Chartered Bank (SCB) doesn’t have anything to argue as its loan is not secured with project assets but it is still delaying the case using arm-twisting and blackmailing tactics, the Committee of Creditors (CoC) counsel told the Ahmedabad bench of National Company Law Tribunal (NCLT) on Friday during the hearing of Essar Steel insolvency case.

Rejecting all charges made by SCB counsel, including that of conspiracy against SBC and entire process of resolution plan as a ‘big scam’, the CoC counsel said that decision on distribution plan was taken on best commercial wisdom of CoC. He further said that through negotiation core-committee could raise ArcelorMittal’s bid from Rs 35,000 crore to Rs 39,500 crore plus minimum guarantee of Rs 2,500 crore as working capital. “Don’t trivialise negotiation through imaginary conspiracy. Decisions were taken on the basis of quality, nature and depth of security,” he alleged.

Earlier on the day SCB counsel said that the heart of the resolution plan lies in distribution mechanism and suggested to increase the offer made by ArcelorMittal. He argued that the procedure was non-transparent, fraud and illegal and as SCB was not amongst the majority, its voice was not heard.

“In the case of liquidation value is Rs 15000 crore, distribution would be done as per security. Similarly, distribution of Rs 42000 crore (ArcelorMittal’s bid) should be placed accordingly,” he added. Meanwhile, in another development related to Essar Steel’s Insolvency case, GPI Textile, owned by Prmod Mittal, the younger brother of ArcelorMittal’s LN Mittal, withdrew its application with liberty to file it afresh.

GPI Textile had approached NCLT Ahmedabad bench and sought quashing of ArcelorMittal’s resolution plan, claiming that it still owes his company Rs 300 crore. ArcelorMittal and resolution professional of Essar Steel had opposed GPI Textile counsel’s plea, stating committee of lenders in a written submission before the NCLT Ahmedabad had said they did not object to ArcelorMittal plan.

The Financial Express reported

FE: ArcelorMittal bid for Essar Steel ‘big scam’: Standard Chartered

8 February 2019: Standard Chartered Bank’s (SCB) counsel on Thursday termed the bid made by ArcelorMittal for the distressed Essar Steel Limited (ESL) as ‘big scam’ during the hearing of Essar Steel Insolvency Case.

Arguing before the Ahmedabad bench of National Company Law Tribunal (NCLT) on Thursday, the SCB counsel said that instead of upfront payment of over Rs 42,000 crore, ArcelorMittal submitted a plan of Rs 39,500 crore and Rs 2,500 crore for working capital.

He further said that the profit being earned by Essar Steel which is monthly Rs 180-200 crores per month shouldn’t belong to the bidder but it should be given to creditors. SCB counsel also raised concern over the role of resolution professional (RP) and committee of creditors (CoC) appointed sub-committee.

Earlier RP’s counsel stated that RP’s job is to present resolution plan to CoC for approval and he is not responsible for any decision. “Role of RP is just that of a facilitator. It is CoC, which decides on Resolution Plan. Distribution mechanism is also decided by CoC. Both these plans were voted separately and passed with majority,” he told the NCLT.

The Financial Express

ET: L&T Finanace offloads ADAG shares

8 February 2019: L&T Finance sold shares of Anil Dhirubhai Ambani Group companies on Thursday.

According to the bulk deal data on the NSE, L&T Finance sold 2 crore shares of Reliance Communications at Rs 5.14 per share and sold 77.87 lakh shares of Reliance Capital at Rs 123.89 apiece. 

L&T Finance sold 49 lakh shares of Reliance Infrastructure at Rs 120.98 per share and 6.25 crore shares of Reliance Power at Rs 10.8 per share. 
Shares of ADAG Group companies have been under heavy selling pressure in the last few days after Reliance Communications said it will move the insolvency tribunal for bankruptcy protection.

On Thursday, shares of RCom ended down 5.3 per cent at Rs 5.19 on the BSE. Reliance Power’s shares plunged 22 per cent to Rs 9.95. Shares of Reliance Capital ended down 19 per cent at Rs 116.20 and Reliance Infra ended down 28 per cent at Rs 110.80.

The Economic Times reported

FE: As Essar Steel insolvency awaits NCLT verdict, Supreme Court to hear operational creditor on 11 Feb

8 February 2019: As the Essar Steel’s insolvency and bankruptcy case plays out at the NCLT Ahmedabad, awaiting verdict due by 11 February 2019, there might be yet another spanner in the wheel which could throw the process off the track, even if for a short duration. The Supreme Court will hear an operational creditor Kamaljeet Singh Ahluwalia’s plea on 11 Feb. Ahluwalia had moved the apex court against the NCLAT directive to NCLT Ahmedabad to decide on Essar Steel’s resolution plan by 11 Feb.

It may be noted here that the National Company Law Appellate Tribunal (NCLAT) had asked the National Company Law Tribunal (NCLT) to decide on Essar Steel’s resolution plan involving ArcelorMittal’s Rs 42,000-crore bid by 11 Feb. The NCLAT itself is reportedly due to take the matter up on the following day, 12 Feb, after it is heard at the NCLT Ahmedabad.

Earlier, Kamaljeet Singh Ahluwalia had moved NCLAT before approaching the Supreme Court, requesting it to ask NCLT to hear his plea before the ArcelorMittal resolution plan is accepted. His plea was rejected by a two-judge bench headed by Justice S J Mukhopadhaya, which ruled that NCLAT would not take the matter up before the hearing is finished at the NCLT.

According to Essar Steel’s website, the company owes Rs 41.4 crore to Kamaljeet Singh Ahluwalia. Essar Steel has long been embroiled in the insolvency and bankruptcy case.

Meanwhile, the promoters and the stakeholders in the company eye the 11 Feb deadline as the NCLT will be taking a final call over ArcelorMittal’s Rs 42,000 crore resolution proposal submitted by the Committee of Creditors (CoC). The NCLT has already rejected a plea by Essar Steel’s original promoters — the Ruia family — who had sought to enter into the race for acquiring the company back from the insolvency and bankruptcy process.

The Essar Steel case is one of the 12 large cases listed by the RBI in its first list for resolution under 2016 Insolvency and Bankruptcy Code. The company had declared bankruptcy in 2015 after it faced several debt issues and fraud allegations. The company, which was promoted by the Ruia family, got involved in insolvency proceedings in August 2017.

After a prolonged bidding war, Lakshmi Niwas Mittal’s ArcelorMittal emerged as the winning bidder with Rs 42,000-crore bid. However, soon after, Ruias sought to get back the control of the company by making a counter offer of Rs 54,000 crore.

The Financial Expresses reported

BS: Essar Steel insolvency case: 28 operational creditors move Supreme Court

8 February 2019: Nearly 28 operational creditors of Essar Steel have moved the Supreme Court (SC) challenging the appellate tribunal’s directions to the Ahmedabad Bench of the National Company Law Tribunal (NCLT), in which it had said that all the operational creditors cannot be given day-to-day hearing.

In its order, the National Company Law Appellate Tribunal (NCLAT)  had said only a representative of the operational creditors could be given the opportunity to raise any objections to ArcelorMittal’s resolution plan for Essar Steel.

In their petition before the top court, the operational creditors have said that since they are not a party before NCLT, the NCLAT’s order restricting their objections was “unprecedented, contrary to practice and procedure, and in complete breach of principles of natural justice”.

The NCLAT on February 4 asked the NCLT-Ahmedabad to start hearing ArcelorMittal’s resolution plan submitted under Section 31 of the Insolvency and Bankruptcy Code (IBC) and decide the matter by February 11.

The appellate tribunal had on January 23 asked the NCLT-Ahmedabad to decide on Essar Steel erstwhile promoters’ offer to settle all debts by paying close to Rs 54,390 crore within a week, failing which it would take up the matter on February 4 and pass orders.

On January 31, the NCLT-Ahmedabad, however, rejected Essar Steel promoters’ offer to settle debt, following which the NCLAT asked it to take up ArcelorMittal’s resolution plan and decide upon it by February 11.

The corporate insolvency resolution process of Essar Steel has been running for around 500 days now, against the deadline of 270 days. It has seen many twists and turns, including the debarment of Numetal as a bidder, following which the Ruias had made a last-ditch effort to retain control of the family crown.

On October 25, the promoters of Essar Steel offered to pay Rs 54,390 crore to settle all debts of the company and withdraw it from insolvency. The plan included an up-front cash payment of Rs 47,507 crore to all creditors, including Rs 45,559 crore to senior secured financial creditors. This would have meant that the secured financial creditors would not have to take any haircut on their dues.

On the other hand, ArcelorMittal, whose resolution plan is under consideration at the NCLT-Ahmedabad, has had to clear dues related to its firms in order to become eligible to place a resolution plan for the debt-laden Essar Steel. The SC had on October 4 said ArcelorMittal would qualify as a bidder only if it cleared the Rs 7,000 crore dues of the two firms, Uttam Galva and KSS Petron, it was previously associated with.

Business Standard reported