NCLAT sets aside plea against CarVal’s resolution plan for Uttam Value Steel

The National Company Law Appellate Tribunal (NCLAT) has given its go ahead for the resolution plan of New York-based CarVal Investors’ to acquire the debt-ridden Uttam Value Steels Ltd.

The appellate tribunal in a judgment on Wednesday set aside a plea challenging the order by National Company Law Tribunal’s (NCLT) Principle Bench approving the resolution plan.

The company has a total admitted debt of Rs 3,003 crore.

The appellate tribunal noted that the appellants are aggrieved with the allocation of a “tiny” amount of 0.18 per cent of the outstanding dues.

The collective admitted operational debt of the appellant was Rs 423.82 crore which was 80.88 per cent of the total operational debt of the corporate debtor total being Rs 524 crore. The appellant was also representative of the operational creditor in the meeting of CoC, being holder of more than 10 per cent of the total admitted debt of Rs 3,003 crore.

Five operational creditors moved the NCLAT post the NCLT’s approval to the plan alleging that the adjudicating authority has approved the resolution plan, where the appellant is getting hardly 0.18 per cent or 0.19 per cent of its claims. The appellant is logically upset that they are paid 0.19 per cent whereas the Financial Creditors (CoC decision takers) are getting 41.75 per cent of their claims.

The figure cited by the Operational Creditor, that the Financial Creditor have got Rs 1,035 crore from an admitted debt of Rs 2,479 crore (41.75 per cent)

The three-judge bench said that the issue of prior approval from the Competition Commission of India (CCI) under the Insolvency and Bankruptcy Code, 2016 is incorrect and CCI approval is not a condition precedent for the approval of the resolution plan.

“The CCI approval has been procured on June 4, 2019 in compliance with the provisions of the Code. It is submitted that condition requiring CCI Approval is ‘directory’ and having obtained the same, the provisions Section 31(4) have been complied with,” the order said.

After several observations, the NCLAT bench said: “We find that there is no merit in this Appeal and the Appeal is hereby dismissed. Pending IA, if any, are disposed of in terms of above observations and directions. Interim orders, if any, stand vacated. There shall be no order as to costs”