ArcelorMittal to Supreme Court: pays a contribution if the Essar Steel bid is accepted

NEW DELHI: ArcelorMittal told the Supreme Court that it would levy the escrow at Rs 7,000 crore and pay the money owed by Uttam Galva and KSS Petron, companies in which LN Mittal was classified as promoter, if it was successful for Essar Steel can offer. "If the bid is accepted, I will pay, it's big business – you can not go back to your word," senior lawyer Harish Salve told the bank Thursday, including Justices RF Nariman and Indu Malhotra.

The National Company Law Appellate Tribunal (NCLAT) had asked the company on September 7 to pay the money before it could bid for the ailing Ruia-based company.

Arcelor had said that the money was in a blocked account but should not have offered, which led to it having to move to the highest job. Salve said that Arcelor had "deep pockets" and made provisions for the money.

"But we can not pay for them (Uttam Galva, KSS contributions) according to the law, it becomes immediate taxable income in the hands of the company if I pay without any compensation," Salve said. "We have to come to a structure, you say you pay – we will, but it is not as simple as that, and sufficient facilities (for the payment of debts) must be treated in the same way as the payment, which are listed companies. legal obstacles to payment. "To facilitate payment, some kind of structure needs to be worked out.

He also criticized the rival bid on Essar Steel by Numetal, saying that the promoters had at least 45,000 crore as non-performing assets in 2017 (NPAs). That would now have increased with the principal and the interest. He said that the money that Arcelor had to offer would not be collected locally, but from markets worldwide. "They will approach private equity funds," he said.

He compared the two bids and contested the NCLAT order, which had called the Rs 7,000 crore debt as a stigma. "Rs 7000 crore is my stigma, what about their Rs 45,000-crore stigma?" He said Arcelor's bid on Essar Steel was higher than that of Numetal, which he said was a way to get the "promoters ( Ruias) circle in an opaque way. "

NCLAT had said that Numetal had to ensure that the consortium was not a member of the Ruia family that founded the EssarGroup to be eligible for a bid. The insolvency and bankruptcy code (IBC) does not allow the participation of bidders who are linked to defaulting companies. Numetal has said that it is in accordance with the code.

ArcelorMittal filed a new bid for Essar Steel's bankruptcy on Monday, in accordance with NCLAT's ruling. Lenders have decided to wait for the Supreme Court ruling on the eligibility of the Numetal bid.

Arcelor-Mittal's revised offer is linked to Rs 42,000 crore, along with a commitment to repay Rs 7,000 credits from the two companies, reported ET on 11 September. Numetal has offered Rs 37,000 crore, while Vedanta's offer is estimated at Rs 30,000-35,000 crore, according to sources.

Salve said Arcelor had no quarrel with Vedanta's offer. He also mentioned some loopholes in the insolvency law and urged the bank to plug it in. "Insolvency is not a nationalization, and insolvency is meant to get the maximum value for an asset," he said. "Liquidation gets the minimum value," he said and urged the court to allow more flexibility in the law. The creditors' committee should have more room for maneuver to allow companies to lift their dismay, he said. There must be no intervention from the NCLT or NCLAT in the solution process, he said.

"The NCLAT is not a supervisory authority," he said. Nariman agreed. "The process is wrong from top to bottom," he said.

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