The Supreme Court in a significant ruling paved the way for ArcelorMittal takeover of debt-ridden Essar Steel for Rs 42,000 crore and set aside the 4 July NCLAT order giving equal status to financial creditors and operational creditors.
PTI reported that in a bench headed by Justice R F Nariman clarified that financial creditors enjoy primacy over operational creditors and the adjudicating authority cannot interfere with the decision approved by the committee of creditors.
The top court said that the adjudicating authority can send back the resolution plan to the committee of creditors (COC) for implementation in accordance with the guidelines but cannot change the commercial decision taken by the COC.
The bench also relaxed the timeline of 330 days to find a resolution plan as prescribed under the Insolvency and Bankruptcy Code.
The bench said it would be open for the adjudicating authority to maintain the timeline in exceptional cases.
The bench said that the COC resolution plan must balance the interest of all stakeholders.
The apex court had on 22 July ordered status quo in the Essar insolvency case.
The verdict came on a plea of the committee of creditors challenging NCLAT’s order of 4 July in which it had approved steel tycoon Lakshmi Mittal-led ArcelorMittal’s Rs 42,000-crore bid for the acquisition of Essar Steel after it rejected a plea by the lead shareholder of the debt-laden firm challenging the eligibility of the bidder.