Essar Steel Insolvency N.Ranganathan- 1803025
There was an article published in Economic times that “ NO stay of Funds Distribution” at Essar Steel by National Company Law Tribunal ( NCLT) a week back. Let us understand about NCLT, NCLAT and Insolvency and Bankruptcy Code Process ( IBC)
About Essar
Essar Steel is a fully integrated flat carbon steel manufacturer – from iron ore to ready-to-market products.
Essar steel was forced into insolvency proceedings after falling behind Debt payments.
Essar Steel is currently under the IBC process ( Insolvency and Bankruptcy code) and the matter is to decided at the National Company Law Tribunal (NCLT).
About NCLT , NCLAT , IBC
National Company Law Tribunal (NCLT) is a judicial body which takes care of the disputes arising out of the company.
National Company Law Appellate Tribunal ( NCLAT) : NCLAT is a higher forum than NCLT. NCLAT generally reviews decisions of NCLT and checks it on a point of law.
Insolvency Resolution : The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
Arcelor has offered an upfront payment of Rs 42,000 crore towards debt resolution of Essar with a further Rs 8,000 crore of capital injection into the company to support operational improvement.
The committee of creditors (CoC) of Essar Steel had voted to approve ArcelorMittal’s plan and a letter of intent was issued. ( Committee of Creditors is a group of people who represent a company’s creditors in a bankruptcy proceeding)
The National Company
Law Appellate Tribunal has directed Essar Steel’s resolution professional to
call a meeting of the Committee of Creditors and work out the distribution of
the Rs 42,000 crore offered by Arcelor-Mittal in line with the decision of the
Ahmedabad bench of the National Company Law Tribunal.
The NCLAT clarified that it had NOT stayed the
order of the Ahmedabad bench of the NCLT and that the resolution professional
could continue with the process of fund distributon.
NCLAT directed the resolution professional of Essar Steel to call a fresh meeting of committee of creditors (CoC) to discuss distribution of the ₹42,000 crore coming in from ArcelorMittal.
On 21st March the Essar steer promoters had sought to turn the tables on ArcelorMittal with its eleventh hour offer of Rs 54,389-crore offer to settle the dues of banks and other creditors of debt-laden Essar Steel and keep the company within their stable. Their offer was Rs 12,188 crore more than the Rs 42,202 crore bid put in by ArcelorMittal, which has been selected as the preferred bidder by the lenders last week as part of the corporate insolvency resolution process under the Insolvency and Bankruptcy Code. However, the Essar steel did not reveal the source of funds.
Conclusion
It is evident and clear that Essar steel promoters has not revelead the source of funds and Committee of Creditors should allow Arcleor Mittal to take over Essar Steel as per the original decision
Business Management 