26 October 2018
Ruias offer Rs. 54, 389 Crore Repayment Proposal under Insolvency and Bankruptcy Code for Essar Steel with no haircut to Creditors
For Ruia Control over the company to remain, the promoters offered to pay lenders of Essar Steel Rs 54,389 crore including Rs 47,507 crore upfront cash payment to clear all dues and pull out the firm from insolvency proceedings. The offer even betters Rs 42,202 crore offered by the world's largest steel producer Arcelor Mittal. A proposal has been filed before the Committee of Creditors (CoC) for full settlement of the entire admitted claims of the financial creditors, operational creditors, and workmen and employees of Essar Steel India. The Ruia’s by making this offer has pulled a rabbit out of the hat as the Arcelor Mittal offer of Rs 42, 202 Crore would have had the investors taking a haircut. On the flipside, Arcelor Mittal states that Section 12A of the IBC does not apply to the Ruia’s offer as Section 12A clearly states that any application to withdraw must be submitted prior to issuance of the invitation for expressions of interest and must be accompanied by a bank guarantee for the specified amounts. The expressions of interest for Essar Steel were issued in October 2017. This proposal, if falls through without a haircut would also mark a big win for the Insolvency and Bankruptcy Code which was brought in with the aim to curb such defaults and ensure a certain and consistent business environment in India.