NCLAT upholds sale of Electrosteel Steels to Vedanta
11 Aug 2018
The National Company Law Appellate Tribunal ruled that Vedanta Ltd is eligible to bid for Electrosteel Steels Ltd, upholding the sale of the debt-ridden company to the Anil Agarwal-group firm.
A two-judge bench of NCLAT headed by SJ Mukhopadhaya rejected the appeal against the sale of Electrosteel Steels to Vedanta.
The NCLAT also held that both Vedanta and Tata Steel were eligible bidders and that Tata Steel’s resolution plan was fair and equitable to all the creditors, including the operational creditors and, therefore, no interference was called for.
However, the lawyer for petitioner Renaissance Steel India Pvt Ltd, said they would move the Supreme Court against the NCLAT decision.
Vedanta had submitted a resolution plan for Electrosteel Steels in April, involving nearly Rs5,300 crore cash payment against its total outstanding debt of Rs13,000 crore, under which lenders had to forego nearly 60 per cent of the stressed loan account.
The National Company Law Tribunal had approved Vedanat’s resolution plan, making it the first among the 12 large stressed accounts identified by Reserve Bank of India last year to get resolved under the Insolvency and Bankruptcy Code.
Electrosteel owes banks more than Rs13,000 crore, including about Rs5,000 crore to State Bank of India alone.
The resolution process began when SBI filed an insolvency plea in the Kolkata NCLT against the company. The petition was admitted in July 2017.
On 17 April, the NCLT-Kolkata bench of Justice Jinan K R and Justice Madan Balachandra Gosavi approved Vedanta’s bid to acquire Electrosteel.
Though the National Company Law Tribunals had cleared the Tata Steel bid for Bhushan Steel on 15 May and Vedanta’s for Electrosteel on 17 April, both were challenged in the NCLAT, which while not staying the awards had said that the final outcome would depend on its decision on the petitions.
The tribunal rejected the objection by Renaissance Steel India Pvt Ltd, which had argued that Vedanta was ineligible to bid as one of its affiliates was found guilty in Zambia of environmental regulations violation.
The appellate tribunal, however, allowed Vedanta to deposit Rs5,320 crore to acquire Electrosteel Steels. The tribunal also refused to stay the delisting of Electrosteel Steels initiated by Vedanta.