Late last week, the committee of creditors (CoC) accepted an offer by ArcelorMittal which was subsequently submitted by the resolution professional for Essar Steel to NCLT for approval.

The persons mentioned above and aware of the developments said the Ruias would, in all probability, file an objection with the tribunal latest by Tuesday “to intervene and object against the resolution professional’s submission of the ArcelorMittal resolution plan for the NCLT’s approval”.

The persons said they were yet to hear from the CoC on the offer submitted by the Ruias to them last week. Last week, the Ruias offered an upfront cash payment of Rs 47,507 crore to all creditors, including payment of Rs 45,559 crore to the senior secured financial creditors under Section 12A of the Insolvency and Bankruptcy Code (IBC) introduced in 2018 by way of an amendment.

The clause allows withdrawal of insolvency proceedings subject to approval by 90% of the creditors and NCLT. Speaking in his personal capacity last week, eminent lawyer Shardul Shroff, founder, Shardul Amarchand Mangaldas, told FE, that Section 12A would not be applicable in the case of Essar Steel’s promoters.

“Section 12A is valid only before the the EoIs come in. But here not only have the EoIs come in the CoC has finished voting on the two proposals as mandated by the Supreme Court,” he said. More importantly, he pointed out that a reading of the Supreme Court order stated there has to be a re-submission by Numetal and ArcelorMittal, and Essar by itself was not a party or a bidder.

As is known, more than 90% of the CoC finally voted in favour of the bid by ArcelorMittal which has promised Rs 39,500 crore by way of cash upfront. State Bank of India (SBI) had referred Essar Steel to the NCLT seeking a resolution via the corporate insolvency resolution process under the IBC. Essar Steel owes lenders about Rs 49,000 crore.

When asked about the source of funds, the persons close to the Ruias said this would be revealed if and when the CoC approved of the promoters’ plan to take back control of Essar Steel. Over the weekend, sources close to the Essar Group also suggested it had already de-leveraged debt of approximately Rs 80,000 crore so far, and inclusion of approximately Rs 45,000-crore debt of Essar Steel, which is currently under settlement, would take the figure to a total of around Rs 1,25,000 crore or over 85% of total group liabilities.

ArcelorMittal’s resolution plan for Essar Steel also faces another legal hurdle in the form of a caveat petition filed by Standard Chartered Bank in the ongoing insolvency case in its role as a dissenting financial creditor. The caveat, filed on Friday, according to media reports will ensure that no decision is passed on the resolution plan until Standard Chartered is head bvy the tribunal. Various senior bankers had indicated to FE that Standard Chartered had voted against the Arcelor Mittal resolution plan last week.

As per reports, Standard Chartered’s dissent arises from the fact that it is being treated as a minor financial creditor under ArcelorMittal’s plan and due to receive only a little over Rs 60 crore.