GAIL, Getco seek rejection of ArcelorMittal’s Essar Steel bid
20 Nov 2018
GAIL (India) Ltd and Gujarat Energy Transmission Corp (Getco) have moved the National Company Law Tribunal seeking rejection of ArcelorMittal’s Rs42,000-crore offer to take over debt-laden Essar Steel, saying the debt resolution process has overlooked claims of operational creditors.
Gail (India) and Getco along with other operational creditors have demanded rejection of ArcelorMittal’s resolution plan for Essar Steel unless their claims are respected.
The two state-run companies have filed separate applications for claims totalling nearly Rs1,800 crore at the Ahmedabad bench of the National Company Law Tribunal.
ArcelorMittal’s Rs42,000-crore resolution plan for Essar Steel includes payment of Rs41,987 crore tofinancial creditors who have a collective exposure of Rs49,395 crore. For operational creditors, however, the plan offers a mere Rs214 crore against the outstanding of Rs4,976 crore.
Against the Rs214 crore offered by ArcelorMittal’s resolution plan to Essar Steel’s operational creditors, GAIL and Getco have claims totalling Rs1,800 crore against Essar Steel.
The two companies have filed separate interlocutory applications with NCLT’s Ahmedabad bench.
In its application filed on 16 November, GAIL has claimed Rs907.20 crore towards non-offtake of gas that it had signed for under a take or pay agreement. Of this, about Rs125 crore has already been admitted in the list of creditors of the company.
GAIL petition sought rejection of the ArcelorMittal proposal stating that the resolution plan was in contravention of Section 30 (2) of Insolvency and Bankruptcy Code and “completely fails to protect the interest of operational creditors”.
Getco, in its petition sought a direction to include its entire claim of Rs896.52 crore for power it had supplied to Essar Steel and rejection of the resolution plan in case this is not met.
Besides GAIL and Getco, as many as 29 operational creditors of Essar Steel had filed petitions in NCLT pleading that the debt settlement proposal made by shareholders of Essar Steel be considered as it would pay off all outstanding of both financial and operational creditors.
The 29 operational creditors, which have about Rs381 crore in outstanding dues from Essar Steel, want ArcelorMittal to pay them in full or the Rs54,389-crore proposal of the owners of Essar Steel be considered.
Essar Steel Asia Holding Ltd, the promoter of Essar Steel, proposed to pay Rs 54,389 crore to clear all dues of the financial and operational creditor in a last-ditch effort to avert losing their flagship company.
The Committee of Creditors, however, favoured ArcelorMittal’s Rs42,000-crore bid as it covered the entire portion of financial credit. (see: ArcelorMittal wins bankrupt Essar Steel despite Ruias' last ditch effort).