SC Clears Final Hurdle for ArcelorMittal Acquisition of Essar Steel

Release time：Nov 19, 2019 From：admin

India’s Supreme Court has set aside the 4 July order of National Company Law Appellate Tribunal approving ArcelorMittal's INR 42,000 crore bid for acquiring Essar Steel, which had given financial creditors equal status with operational creditors in the distribution of ArcelorMittal's bid amount. A bench comprising of Justice RF Nariman, Justice Surya Kant and Justice V Ramasubramanian clarified that financial creditors enjoy primacy and the adjudicating authority cannot interfere with the decision approved by the committee of creditors. The said “The tribunal can send the plan back to the committee in case it finds that legal parameters are not met but it cannot tinker with the plan.”

Banks had moved to the Supreme Court after an appellate court judgment put the claims of Essar’s operational creditors on a par with those of its lenders. In its July 4 order, the NCLAT had said that financial creditors will get 60.7% of their admitted claims of INR 49,473 crore, almost same as operational creditors. Before that, the core committee of bankers in charge of coming up with a resolution plan had decided financial creditors would get paid 90% of their claims