The Supreme Court on Friday set aside the July 4 order of the NCLAT approving ArcelorMittal's Rs 42,000-crore bid for acquiring debt-laden Essar Steel. It said that the acquisition would take place as per the October 23, 2018, resolution plan of ArcelorMittal.
A bench headed by Justice R F Nariman quashed the National Company Law Appellate Tribunal (NCLAT) order, which had given financial creditors equal status with operational creditors in the distribution of ArcelorMittal's bid amount. The court also lifted a stay on the acquisition process.
Stressing that secured and unsecured creditors cannot be treated on par, the top court also relaxed the timeline of 330 days to find a resolution plan as prescribed under the Insolvency and Bankruptcy Code (IBC). The NCLAT 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 bench on Friday clarified that financial creditors enjoy primacy and the adjudicating authority cannot interfere with the decision approved by the committee of creditors.
(With PTI inputs)
