Ruias Offer To Repay Over Rs 54,000 Cr To Withdraw Essar Steel From Insolvency

Promoters of Essar Steel Ltd, the Ruia family, have offered to repay creditors of the steel firm in an attempt to withdraw it from the insolvency resolution process it is currently in the midst of. In a press statement on Thursday, the company said that the board and shareholders of the firm are willing to pay Rs 54,389 crore to creditors. The company said that Essar shareholders will offer upfront cash payment of Rs 47,507 crore to all creditors. This included Rs 45,559 crore to the senior secured financial creditors. Board and shareholders of Essar Steel offer to make payment aggregating Rs 54,389 crore to creditors of all classes under Section 12A of IBC to withdraw company from corporate insolvency resolution process. Under Section 12A of the Insolvency and Bankruptcy Code, 2016 the National Company Law Tribunal may allow withdrawal of an insolvency application by the person who filed the case but with the approval of ninety percent voting share of the committee of creditors. But subsequently, the law was amended to say that such a withdrawal can only happen before expressions of interest are invited by the resolution professional. In the Essar Steel matter, the process has moved way ahead and is almost close to finalisation of resolution applicant. Last week, the committee of creditors had picked Arcelor Mittal as the preferred bidder. Essar Steel is among the first 12 non-performing assets that RBI had directed banks to take to insolvency resolution in June 2017. The Ruia family-promoted company owes Rs 49,394 crore to its financial creditors and approximately Rs 5,000 crore to operational creditors. The company’s lenders, led by State Bank of India, had filed an insolvency petition in July 2017 and the National Company Law Tribunal admitted the case in August that year.