Our Bureau In a last-ditch attempt to retain ownership of Essar Steel, the existing shareholders of the company — primarily the Ruia Group — have offered to settle the company’s entire debt of ₹54,389 crore.

In a proposal submitted on Thursday, the Ruias urged the lenders to withdraw the corporate insolvency resolution process against Essar Steel.

The move came even as Essar Steel’s Committee of Creditors (CoC) on Thursday voted in favour of accepting ArcelorMittal’s bid of ₹42,000 crore. But with the Ruias offering ₹13,000 crore more than ArcelorMittal, the lenders may seek a legal opinion on the matter.

The Ruias had made a similar offer earlier this year but the lenders had rejected the proposal. What has changed now in favour of the Ruias is an amendment to the IBC rules in June that allows lenders to withdraw a company from the resolution process if 90 per cent of the creditors agree to it.

The Ruia Group offer includes an up-front cash payment of ₹47,507 crore to all creditors, including ₹45,559 crore to the senior secured financial creditors, and an additional ₹4,995 crore to operational creditors. However, there is no clarity on how the money will be raised to pay the debt.

According to industry sources, the Ruias may have negotiated a back-end deal with Russian bank VTB along with some of the other investors in the Numetal consortium. A senior banker said the lenders will consider the Essar offer only if the Ruias show the money.

The Essar Group said its offer is better than ArcelorMittal’s because the latter takes care of only the secured creditors.

Prashant Ruia, Director, Essar, said: “We believe our current proposal will provide 100 per cent recovery to secured creditors and lenders, and maximum recovery for unsecured creditors. This is well in excess of that offered (by ArcelorMittal) in the proposal under consideration, and is in line with value maximisation, which is the underlying principle of the IBC process.”

An ArcelorMittal spokesperson said the Essar Group has misread the IBC as section 12A does not apply to the resolution process of Essar Steel.

MS Sahoo, Chairman of the Insolvency and Bankruptcy Board of India, had recently said that the fear of losing their company was making promoters pay up debt. Sahoo will, however, have to ensure that the promoters do not make a mockery of the insolvency process. “Over the last year one has gone through multiple court hearings, lenders meetings, three rounds of bidding and after all this we are still not sure who will own the company. This delay will hurt investor sentiments,” said a foreign investor representative.

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