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NCLAT directs Essar Steel RP to call CoC meeting to reconsider distribution of funds from ArcelorMittal

Steel News - Published on Fri, 22 Mar 2019

Image Source: Nikkei Asian Review
Financial Express reported that the National Company Law Appellate Tribunal on Wednesday directed Essar Steel’s resolution professional to convene a meeting of committee of creditors to reconsider the distribution of the INR 42,000 crore coming from ArcelorMittal’s resolution plan among financial and operational creditors, as suggested by the National Company Law Tribunal. The two-member NCLAT bench headed by Justice SJ Mukhopadhaya said the CoC must reconsider the apportionment of fund and as such, a meeting of the lenders was warranted. They said “We are not staying the impugned order of the adjudicating authority. It has to be implemented in letter and spirit. It did not have any intent to stop implementation of the resolution process for Essar Steel. If there was any discrimination in the distribution of funds, it would order modification in the apportionment.”

Approving ArcelorMittal’s resolution plan in a March 8 order, NCLT’s Ahmedabad bench had suggested that lenders give 15% of the proceeds to operational creditors on a pro rata basis, but had left the decision entirely to their discretion while rejecting the claims by operational creditors.

NCLAT was hearing a plea moved by Standard Chartered Bank alleging that ArcelorMittal’s plan was discriminatory and therefore, the distribution of funds should be stopped.

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Posted By : Rabi Wangkhem on Fri, 22 Mar 2019
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