Promoters offer to repay over Rs 54,000 Cr to withdraw Essar Steel from Insolvency
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In a press statement on Thursday, the company’s shareholders said they are willing to pay Rs 54,389 crore to creditors. The company said that Essar shareholders will offer upfront cash payment of Rs 47,507 crore to all creditors. This included Rs 45,559 crore to the senior secured financial creditors.
Essar Steel owes its financial and operational creditors Rs 54,394 crore as per data provided by the resolution professional on the company’s website.
Board and shareholders of Essar Steel offer to make payment aggregating Rs 54,389 crore to creditors of all classes under Section 12A of IBC to withdraw company from corporate insolvency resolution process.
Essar Steel Statement
Introduced in June 2018, Section 12A of the Insolvency and Bankruptcy Code, 2016 says the National Company Law Tribunal may allow withdrawal of an insolvency application by the person who filed the case if such withdrawal gets the approval of ninety percent voting share of the committee of creditors. In July an IBC regulation laid down that such a withdrawal application can only be accepted before issue of invitation for expression of interest by the resolution professional.
In the Essar Steel matter, the process has moved way ahead and is almost close to finalisation of resolution applicant. Last week, the committee of creditors had picked ArcelorMittal as the preferred bidder. As BloombergQuint had reported earlier ArcelorMittal had bid Rs 42,000 crore, the most among the three players in the second round of bidding. After being picked as the winning bidder the Essar Steel Committee of Creditors, tasked with the job of insolvency resolution, were in negotiation with ArcelorMittal on the price.
Also, in order to qualify under the Section 29A eligibility criteria, earlier this month ArcelorMittal approved a payment of Rs 7,469 crore (approx. $1 billion) to the financial creditors of Uttam Galva Steels Ltd. and KSS Petron Pvt. Ltd. The Supreme Court had found ArcelorMittal to be promoter of both these non-performing assets and hence eligible to bid for Essar Steel only if their dues were paid.
In their statement Essar Steel’s promoters argue that their offer is better than that of ArcelorMittal as they are willing to pay all financial creditors, unsecured creditors and operational creditors. #casansaar (Source - BloomBerg)
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