A dedicated bankruptcy court on Monday reserved its order on an application filed by the resolution professional of Uttam Galva Steel Ltd, seeking approval of the resolution plan filed by AM Mining India Pvt Ltd, a wholly-owned subsidiary of ArcelorMittal India Pvt Ltd.
The Mumbai bench of the National Company Law Tribunal (NCLT) presided by members PN Deshmukh and KK Vohra reserved the order after hearing arguments from the counsels of the resolution professional (RP) Milind Kasodekar, the successful bidder and creditors.
“We will clarify the concern of every stakeholder in the order,” the tribunal said and directed all the parties to file their written submissions.
Appearing for the ArcelorMittal subsidiary, senior advocate Ravi Kadam along with Shahezad Kazi of S&R Partners told the tribunal that the revival plan was almost unanimously approved by the lender. The company emerged as the sole bidder for Uttam Galva Steels in March 2021.
The tribunal also reserved its order on a separate plea filed by the sales tax department, which argued that the company owed over Rs 500 crore to the department but the RP has admitted only Rs 31 crore.
This was contested by the counsel for the resolution professional, Chetan Kapadia, who argued that the tax department’s claim was not crystalised when the company was admitted under the Corporate Insolvency Resolution Process (CIRP). “The department had initiated the proceedings when the company was under moratorium,” argued Kapadia.
Last year in June, lenders to Uttam Galva Steels had almost unanimously approved the resolution plan of Europe’s largest steelmaker ArcelorMittal Group.
On October 1, 2020, the tribunal admitted an insolvency petition against the debt-laden Uttam Galva Steels in a petition filed by the State Bank of India (SBI). The company had defaulted on its external commercial borrowing (ECB) facility extended by the bank to the tune of $6.6 million in November 2019.
Earlier, the loans were taken over by ArcelorMittal, which paid off Rs 4,922 crore to the secured financial lenders of Uttam Galva Steels, including SBI, and later, the overdue principal paid was assigned to ArcelorMittal India. The Lakshmi Mittal-owned group had acquired the debt of the company from Uttam Galva’s lenders to be qualified to acquire Essar Steel.
The company owes more than Rs 9,300 crore to its lenders where ArcelorMittal Group has 87% voting rights in the Committee of Creditors (CoC).
Uttam Galva is among the largest makers of value-added steel in western India with facilities located at Khopoli, about 75 km from Mumbai.