Essar Steel Case: SBI Moves Supreme Court Challenging NCLAT’s Suggestion To Reconsider Allocation

The State Bank of India moved the Supreme Court challenging the National Company Law Appellate Tribunal’s suggestion to give more money to Standard Chartered Bank in the Essar Steel Ltd.’s insolvency case.

Over the weekend, the committee of creditors for Essar Steel voted in favour of not giving more than Rs 60 crore to Standard Chartered against its claim of nearly Rs 3,500 crore, as it is an unsecured lender. The creditors’ committee, however, agreed to give another Rs 1,000 crore to operational creditors, 0ver and above Rs 196 crore repayment decided earlier.

The Supreme Court is yet to provide a date for the hearing.

The voting was conducted after the appellate tribunal last month suggested the creditors’ committee to reconsider the amount allocated to financial and operational creditors. The NCLAT also observed that there cannot be any discrimination between secured creditors.

The operational creditors and Standard Chartered Bank had opposed ArcelorMittal’s resolution plan on grounds of unfair distribution. Last month, the National Company Law Tribunal approved the U.K.-based steelmaker’s resolution plan for the insolvent company. ArcelorMittal will pay Rs 42,000 crore against the financial creditors’ claims of more than Rs 49,000 crore.

The appellate tribunal, while refusing to stay the NCLT’s order approving ArcelorMittal’s bid to take over Essar Steel, suggested the committee of creditors to consider giving operational creditors 10 percent of the total proceeds to settle claims. It also suggested the creditors convene a meeting and discuss the suggestions.

Essar Steel was one of the 12 large corporate accounts shortlisted for insolvency proceedings by the Reserve Bank of India in June 2017. State Bank of India and Standard Chartered Bank filed insolvency proceedings against the company at the Ahmedabad bench of the NCLT.