SC sets aside the NCLAT order in Essar Steel case, upholds CoC’s rights over claim distribution

The Supreme Court on Friday said that the ArcelorMittal‘s acquisition of the ailing Essar Steel would take place as per the October 23, 2018, resolution plan of the acquirer.

The court also lifted a stay on the acquisition process.

A bench led by Justice RF Nariman delivered the judgement.

The judgement was challenged by the financial creditors who said that the IBC did not envisage a legal position wherein the operational creditors were to be treated on par with the financial creditors.

The NCLAT had in July 5, 2019, directed that they be treated on par.

The court had then stayed the acquisition. The court ruling also said that no concern can carry on without operational creditors and hence there interests cannot be ignored.

The ruling adds further clarity to the IBC. it also sets the stage for the deal to go through. The court also said that secured and unsecured creditors cannot be treated on par and that the resolution must happen within 330 days barring exceptions. Mittal has been trying for more than a decade to get a foothold in India. The SC ruling paves the way for his homecoming. “I was born and grew up in India and have always remained close to the country of my birth and citizenship,” he told ET in an interview in March. Essar Steel’s capacity will immediately make ArcelorMittal the fourth-biggest player in a nation.
with inputs from Agencies