The Supreme Court on Monday put on hold the sale of debt-laden Essar Steel to ArcelorMittal for Rs 42,000 crore.
A bench headed by Justice RF Nariman will now hear the matter on August 7, according to the Press Trust of India. In the meantime, a committee will monitor the case is heard.
The court’s decision came on a plea by a consortium of lenders led by State Bank of India against the July 4 order National Company Law Appellate Tribunal’s (NCLAT). The tribunal had said that Essar Steel's operational creditors had to be treated on a par with financial creditors, with each set getting 60.7% of their claims on a pro-rata basis.
The financial creditors had said that the bankruptcy court’s ruling to modify the distribution of proceeds would hamper corporate lending and impact future investments by foreign investors.
Apart from banks, ArcelorMittal had also challenged the tribunal’s order. The tribunal had asked ArcelorMittal to not claim any share from Essar Steel’s profit of Rs 4,000 crore which it earned during the insolvency period, said a Bloomberg report. The Supreme Court also admitted ArcelorMittal’s appeal against the tribunal’s ruling.
Global steel tycoon Lakshmi Mittal-led ArcelorMittal's Rs 42,000-crore bid for Essar Steel’s acquisition has seen multiple legal hurdles as the stressed steel firm tries to repay debt of around Rs 54,000 crore. Already, the company’s bankruptcy resolution process has stretched for over 700 days.
In April, the apex court had halted the payment by ArcelorMittal after a dispute between the lenders on the distribution on funds.
Essar Steel was one of India’s top 12 corporate defaulters that were referred to bankruptcy courts in 2017.