ArcelorMittal paves way to buy Essar Steel submerged in Rs 42,000 crore debt

42,000 crore proceeds from ArcelorMittal will be distributed as per the order of the creditors' committee.

(PTI) New Delhi. November 15, 2019, Friday

The Supreme Court has eased ArcelorMittel's way of acquiring debt-ridden Essar Steel for Rs 42,000 crore and also rejected the NCLAT's July 4 order in which it granted equal status to financial creditors and operational creditors.

A bench headed by Justice RF Nariman has clarified that financial creditors have been given priority over operational creditors and the relevant authority cannot interfere with the decision approved by the creditors' committee.

The Supreme Court further stated that the relevant authority may return the creditors' committee (COC) resolution for implementation in accordance with the guidelines but it will not change the commercial decision taken by the COC.

The Supreme Court has also relaxed the 330-day timeline for finding a plan to resolve it according to the Insolvency and Bankership Code. The bench further stated that financial creditors have priority and the National Company Law Applet Tribunal (NCLAT) cannot intervene in the decision made by the creditors' committee. According to the decision of this committee, the amount will be distributed only.

Following the order of the Supreme Court, the amount of Rs 42,000 crore received from ArcelorMittal will be distributed as per the order of the creditors' committee. The Supreme Court has stated that secured and unsecured creditors cannot be compared. The verdict is in favor of the bank and will allow the banks to return 90% of their outstanding balance.

The SBI has said that the verdict will strengthen creditors' position. On this verdict, Essar Steel has said that we wish ArcelorMittal and Nippon Steel to enter India. They are acquiring a world-class company in a market that is capable of long-term growth.