Supreme Court clears path for ArcelorMittal to acquire Essar Steel

NEW DELHI: The Supreme Court on Friday cleared the path for steelmaker ArcelorMittal SA to take over bankrupt Essar Steel, following a legal tussle that has dragged through multiple courts for over two years.
The top court allowed Arcelor to make payment for Essar Steel India Ltd and said operational creditors cannot be treated on par with financial creditors of a bankrupt company, in a ruling that provides relief to lenders and sets a precedent that could speed-up the resolution of other insolvency cases.
The lenders’ panel of a bankrupt company has discretion in the distribution of funds in insolvencies, a three-judge bench headed by Justice Rohinton F Nariman said.
Earlier this year, banks had moved the SC after an appellate court judgment put the claims of Essar’s operational creditors on par with those of its lenders.
The acquisition of Essar Steel India Ltd will make Arcelor the fourth-biggest producer in a nation where the government is investing trillions in infrastructure.
The verdict is likely to be the final approval in a more than year-long battle by Arcelor to take over Essar. While companies can seek a review of decision by the same bench of judges, the success of review petitions is rare.
Essar Steel, with debts from banks worth nearly Rs 50,000 crore ($7.01 billion), was among the so called dirty dozen - twelve large steel and other infrastructure companies which defaulted and were referred to the bankruptcy court in 2017.