The lenders will challenge awarding of higher payout to Essar Steel’s operational creditors and treating them on par with secured lenders as the NCLAT last Thursday modified a resolution plan cleared by the CoC. Besides, they will urge the apex court to set aside another part of the order that held that the creditors can only look at the viability of a resolution plan and have no role in deciding the distribution of funds.

The tribunal had last Thursday approved ArcelorMittal’s Rs 42,000-crore offer for Essar Steel and had rejected its former promoters’ claim that the Arcelor was ineligible to acquire the steel firm.

While approving ArcelorMittal’s bid, the appellate tribunal held that the secured creditors including SBI, IDBI Bank, Canara Bank will get Rs 30,030 crore or 60.7% of their Rs 45,559 crore crore claims and the rest will go to operational creditors, treating them at par with the financial creditors. Operational creditors had made total claims of Rs 19,719 crore and could get Rs 11,969 crore or 59.6%, as per the NCLAT’s order.

The earlier plan approved by the lenders had provided for 90% recovery for all financial creditors and around 20.5% for operational creditors with dues of more than Rs 1 crore.

Citing Regulation 38 of the IBC, which provides that operational creditors under a resolution plan should be given priority in payment over financial creditors, the NCLAT held that such distribution is “not only discriminatory but also arbitrary…We have noticed a huge discrimination made by the CoC in distribution of proposed amount to the operational creditors qua financial creditors”.

Sources said that lenders will seeking clarity on the two issues as the tribunal’s decision might discourage them from going ahead with the insolvency proceedings against any defaulting company. This decision means that the financial creditors would have to take a bigger loss on their loans outstanding than what they hoped, they added.