Essar Steel: SCB counsel Kapil Sibal challenges acceptance of bid amount

Arguing on behalf of Standard Chartered Bank, senior advocate Kapil Sibal on Monday challenged the acceptance of Rs 39,500 crore bid amount by the Committee of Creditors(CoC) of bankrupt Essar Steel.

The amount was contrary to the ArcelorMittal undertaking given to Supreme Court of Rs 42,000 crore for buying Essar Steel.

Sibal made the arguments during the hearing of Essar Steel Bankruptcy proceeding in NCLAT. Standard Chartered Bank is a financial creditor of Essar Steel.

Sibal questioned the conflict of interest of the members of the Committee of Creditors, who allegedly accepted a lower amount. He further alleged that the truncated CoC of four members privately negotiated with Arcelor to get a Slurry Pipeline, which is not an asset of Essar Steel to be included as part of overall resolution of the steel maker.

This meant that an amount of Rs 2,500 crore was taken out from the Rs 42,000 crore settlement offer for Essar Steel for settlement of creditors having exposure in the slurry pipeline.

The Standard Chartered Bank alleged that the amount of Rs 2,500 crore should have been paid to it rather than getting diverted to lenders of Odisha Slurry Pipeline India Limited.

During the hearing, NCLAT also enquired as to why the profits generated during corporate insolvency resolution process (CIRP) should go to the financial creditors, when in fact it is the operational creditors who have supported Essar during the process.

The NCLAT also directed a day-to-day hearing of the case and adjourned the matters to Tuesday.