New Delhi: With steel tycoon Laxmi Mittal on prowl, Ruia’s on Thursday submitted a proposal to the Committee of Creditors (CoC) to pay Rs 54,389 crore to withdraw its flagship Essar Steel from corporate insolvency resolution process.
However, Ruia’s last ditch attempt to prevent the company skipping from their hand may face difficulty. This is because only last week, the committee of creditors had picked Laxmi Mittal’s ArcelorMittal as the preferred bidder to take-over Essar Steel. The matter is likely to go to Supreme Court for a final settlement, said analysts.
Essar said that it had submitted a proposal to the Committee of Creditors (CoC) for full settlement of the entire admitted claims of the financial creditors, operational creditors, and workmen and employees of Essar Steel India Ltd (ESIL), aggregating Rs 54,389 crore, under Section 12A of the code.
ArcelorMittal has agreed to pay Rs 42,000 crore upfront to the creditors and additionally infuse Rs 8,000 crore into Essar Steel, taking the total payout to Rs 50,000 crore.
“The CoC is empowered to consider and approve this settlement plan with the requisite voting share, on the basis of which the corporate insolvency resolution process against Essar Steel may be withdrawn,” said Essar Steel.
It further said that if the CoC were to accept the resolution plan currently under consideration (ArcelorMittal), it will have to settle for a sizeable haircut.
“Essar Steel got into difficulty because of external factors. Regardless, the value and quality of the asset can be ascertained from the interest shown and value offered by all the global steel majors. It has been our constant endeavour to arrive at the best resolution for all stakeholders of ESIL,” said Prashant Ruia, Director, Essar. “We believe our current proposal will provide 100 per cent recovery to secured creditors and lenders, and maximum recovery for unsecured creditors. This is well in excess of that offered in the proposal under consideration, and is in line with value maximisation, which is the underlying principle of the Insolvency and Bankruptcy Code (IBC) process,” added Mr Ruia.
Meanwhile, ArcelorMittal said that IBC’s section 12A does not apply to the process.
