ArcelorMittal gets temporary relief from paying Rs 1,300 cr more in Essar Steel insolvency case

ArcelorMittal India has got a stay order against the payment of Rs 1,300 crore additional CIRP cost by 15 December 2020 in the Essar Steel insolvency case.

The National Company Law Appellate Tribunal (NCLAT) in an order dated 4 December 2020 said: “As an ad-interim the operation of the impugned order as regards making of payment by the Appellant to OSPIL by 15th December, 2020 shall remain stayed till next date of hearing.”

The Ahmedabad bench of the National Company Law Tribunal (NCLT) has in an order passed on 10 November had held that the usage charges for the use of slurry pipeline for running the corporate debtor (Essar Steel) as going concern during the Corporate Insolvency Resolution Process (CIRP) of corporate debtor are IRP costs and directed AreclorMittal to make the payment of CIRP costs to Odisha Slurry Pipeline Infrastructure Ltd (OSPIL) by 15th December 2020.

Terming the order absurd, ArcelorMittal India’s counsel Harish Salve argued that the NCLT order had directed ArcelorMittal to make payment of aforesaid charges as CIRP costs to an entity which had not claimed it during the Corporate Insolvency Resolution Process of Essar Steel or even thereafter.

Also Read: Arcellor Mittal made to pay Rs 1,300 cr more as CIRP cost in Essar Steel insolvency case

OSPIL was a subsidiary of Essar Steel India. Both Essar Steel and Odisha Slurry Pipeline have been acquired by ArcelorMittal through separate insolvency proceedings.

Srei Infrastructure Finance, a financial creditor of Odisha Slurry Pipeline Infrastructure Ltd (OSPIL), has moved the Ahmedabad bench of the NCLT. Srei Infrastructure had given loans to OSPIL to purchase pipeline transferred to it by Essar Steel, and the same was secured by hypothecation of receivables of OSPIL, which included right to usage charges. Srei has in its petition argued that being the financial creditor of OSPIL, it has an interest in the assets of OSPIL, both pre-insolvency and during the insolvency so that such assets are used for its benefits.

Srei Infrastructures Finance argued before the NCLT the use of OSPIL’s pipeline assets was key to ensuring Essar Steel remains a going concern during the CIRP, and that the usage charge amounting to Rs 1,300 crore should have been part of the CIRP cost which was not provided for in the resolution plan.