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GPI Textiles and Deutsche Bank wants ArcelorMittal to pay their dues too

Steel News - Published on Fri, 26 Oct 2018

Image Source: SteelGuru
Business Standard reported that the resolution professional (RP) of GPI Textiles has written to the lenders of Essar Steel, asking ArcelorMittal should pay the firm its dues. The resolution professional of GPI Textiles, which is owned by Pramod Mittal, the younger brother of Laxmi Mittal, has also filed a caveat in Ahmedabad bench of National Company Law Tribunal (NCLT) asking for a hearing. The lenders of GPI Textiles, especially Phoenix ARC Pvt Ltd and the State Bank of India (SAM Branch of Chandigarh), claim that ArcelorMittal has to pay the dues as the promoters of the company are related parties. Financial creditors have over INR 500-crore claim on GPI Textiles. Pramod Mittal was promoter of four companies including Ispat Profiles and Gontermann Peipers, both of which too have failed to repay their loans. ArcelorMittal had said it is not liable for Pramod Mittal’s loan defaults.

Telegraph also reported that Deutsche Bank on Wednesday demanded that the Lakshmi Mittal company pay it back USD 14 million (INR 100 crore) that Uttam Galva owes to the lender. Questioning the process followed by ArcelorMittal India to become an eligible resolution applicant, the Singapore branch of Deutsche Bank has asked ArcelorMittal to immediately pay off the money due to it or face legal action. It also questioned the lenders for approving the eligibility. According to the letter sent by Deutsche Bank on October 23 and reviewed by The Telegraph, two major objections have been raised. Lenders to Uttam Galva assigned the loan on their books to ArcelorMittal or its nominee. This process was followed by the lenders and ArcelorMittal because the latter is no longer a shareholder of Uttam Galva. Deutsche Bank said ArcelorMittal and the lenders did not follow RBI guidelines in assigning the loan. Moreover, the assignment of the loan may not make Uttam Galva a standard asset. It further said that the Supreme Court judgment of October 4 had stated that IBC norms required the payment of the entire loan due and not the assignment of loan, which means mere transfer from one lender to the other. Second, Deutsche Bank argued that paying off loans of lenders based only in India was not enough. All dues, even to foreign lenders, must be paid to become eligible.

ArcelorMittal India had paid INR 7,469 crore on account of the overdue loans of Uttam Galva and KSS Petron to become an eligible resolution applicant for Essar Steel. But Deutsche Bank’s foreign currency loan to Uttam Galva remains outstanding.

Sources said a few more institutions may challenge the CoC’s decision to declare ArcelorMittal as an eligible resolution applicant even as the lenders are voting on the plan submitted by the world’s largest steel producer to revive Essar.

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Posted By : Sanju Moirangthem on Fri, 26 Oct 2018
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