National Company Law Appellate Tribunal makes some big and firm moves

New Delhi: The National Company Law Appellate Tribunal (NCLAT) hearing two major bankruptcy cases made substantial progress in them. One such proceedings pertain to the Infrastructure Leasing and Financial Services (IL&FS) which led to become a threat to savings made by investors. Another being ArcelorMittal’s attempt to Essar Steel acquisition which went to and fro, while the proceeding taking final shape now.

Tells Infrastructure Leasing and Financial Services to release pension/PF money first

Courts have finally come to the rescue of lakhs of investors who face the prospect of losing their entire retirement savings parked in the toxic IL&FS bonds by their respective pension and provident fund (PF) trusts. The NCLAT hearing petitions with respect to IL&FS resolution on Monday directed the new management of debt-ridden firm to submit details of investment made by pension and provident funds in its four group firms along with details of and financial liabilities of those entities.

The appellate bankruptcy court observed that the money invested by pension fund, and PFs does not belong to IL&FS companies and is related to the employees. Therefore it should be released first when loan repayments begin. The court has asked the new management of the insolvent company to provide it details of PF and pension funds investment in individual “amber” entities. There are 13 such entities and court has first taken out four for preparing the chart on investment and held that the remaining nine should also give details of PFs investment by courts during next hearing on April 16.

The move, legal experts said, should be seen as the court’s efforts to ensure that investments by pension and PF trusts is not lost in any resolution plan for IL&FS and that these get priority even when repayment start for “amber” grouped entities where firms are expected to meet only operational payment obligations. As green group companies are meeting all their payment obligations, the fear of loss of investment in these entities is negligible. But PF and Pension funds feared that all their money would be lost in “amber” entities. More than 50 retirement funds covering over 15 lakh employees have exposure to IL&FS. PF trusts of state electricity boards, public sector undertakings (PSUs) and banks are among them.

NCLAT may ask ArcelorMittal to deposit Rs 42,000 cr bid amount
NCLAT said it may direct global steel major ArcelorMittal to deposit Rs 42,000 crore bid amount for acquiring Essar Steel in separate accounts during next hearing on April 23. A two-member bench headed by Chairman Justice S J Mukhopadhaya said that ArcelorMittal may have to deposit the money in a separate account either before the NCLAT or NCLT Ahmedabad-bench. “ArcelorMittal India, successful resolution applicant, would file an affidavit for implementation of plan,” the bench said. It further said, “The Appellate Tribunal may direct the successful resolution applicant to deposit money in one or another account in next date of hearing”.

The bench also said that original plan approved by NCLT Ahmedabad has to be implemented. It also directed the operational creditors and financial creditors of Essar Steel to file a chart next week, detailing their claims approved by resolution professional and CoC. “Financial creditors and operational creditors are allowed to file one page affidavit giving details of their claims approved by RP and its percentage,” it said. Moreover, it has also asked the Gujarat State Tax department to file an affidavit over its claims. The NCLAT was hearing a batch of petitions filed by operational creditors, Gujarat State Tax department and others. ArcelorMittal’s resolution proposal provides financial creditors Rs 41,987 crore out of their total dues of Rs 49,395 crore. Operational creditors, under the plan, would get just Rs 214 crore against the outstanding of Rs 4,976 crore and are contesting before the NCLAT.

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