The Supreme Court on Monday rejected a petition by operational creditors of Essar Steel seeking a share in the resolution pie, clearing the hurdle in ArcelorMittal’s takeover of the firm. But bankers suspect that further legal obstacles could come in the way of the resolution. Operational creditors had approached the Supreme Court after the New Delhi based National Company Law Appellate Tribunal (NCLAT) set a February 11 deadline for the bankruptcy court in Ahmedabad to decide on ArcelorMittal’s Rs 42,000 crore resolution plan for Essar Steel.
The NCLT Ahmedabad however reserved its order on operational creditors giving more time to them to submit their objections in writing in the next couple of days. There are more than 30 operational creditors who have objected to the committee of creditors awarding Essar Steel to ArcelorMittal because all their claims have not been fulfilled. On Monday, the NCLT heard oil marketing company BPCL, one of the 30 operational creditors to Essar Steel. The judge said he will continue the hearing since he had not yet received a copy of the order by the appellate authority directing the Ahmedabad bench of the bankruptcy court to finalise its order by February 11.
The hearing will continue on Tuesday, with the NCLT hearing an appeal by Essar Steel directors led by Prashant Ruia seeking to set aside the ArcellorMittal bid citing the January 31 Supreme Court judgement in the Ruchi Soya case which said that the suspended board of directors were required to be included in all deliberations by the committee of creditors, including the discussions of resolution plans which are to be voted upon.
The view taken by NCLT on the Ruia bid will be crucial in the final decision of the court. It remains to be seen as to what view the NCLAT takes because a two member bench headed by Justice S J Mukhopadhaya had directed the NCLT to pass the final order by Feb 11. “If no order is passed by 11th February, 2019, this Appellate Tribunal may call for records and pass appropriate order under Section 31 of the I&B Code,” the NCLAT had said. The NCLAT said that a “detailed hearing is not required to be given including all the creditors” by the Ahemdabad bench and “it should be completed within five days”.