The steel corporation has been facing a severe financial crisis, which led to its admission into the corporate insolvency resolution process. The resolution plan for the subsidiary is approved by ISC and NCLT .This move came after India Resurgence ARC filed a petition against the company for a debt of over ₹2,700 crores. The steel corporation is now undergoing the resolution process to revive its operations and repay its creditors.
After much deliberation and careful consideration, the Mumbai panel of the National Company Law Tribunal( NCLT) has accepted the resolution plan presented by AM Mining India Pvt Ltd for Indian Steel Corporation (ISC). This is a significant step forward for ISC, and it is reassuring to know that Arcelor Mittal, an affiliate of AM Mining India Pvt Ltd, will be involved in its future.
The order passed by the National Company Law Tribunal (NCLT) division bench’s consisting of judicial member Kuldup Kareer and technical member Shyam Babu Gautam on April 13, 2024, has garnered attention within the legal community.
Indian Steel Corporation had incurred a financial debt of over ₹2,700 crores, a significant setback for the company. However, with the help of a comprehensive debt restructuring plan, the corporation was able to turn things around. By implementing cost-cutting measures, streamlining operations, and diversifying its product line, Indian Steel Corporation was able to reduce its debt and achieve sustainable growth.
National Company Law Tribunal (NCLT) was established by the Central Government on June 1st, 2016, by section 408 of the Companies Act, 2013 (18 of 2013). NCLT is a crucial legal authority in India that deals with corporate insolvency resolution processes (CIRP). In October 2021, an application by India Resurgence ARC led to the initiation of CIRP against ISC by the NCLT.
April 27, 2022, marked an important milestone for AM Mining as the Committee of Creditors finally approved their resolution plan after 6 meetings. The fact that the vote was unanimous, with a 100% approval rate, is a testament to the soundness and viability of the plan. This decision brings hope to the management and employees of AM Mining and signals a positive future for the company.
AM Mining is a well-established joint venture between two giants of the steel industry, Arcelor Mittal Luxembourg and Nippon Steel Corporation, Japan. The partnership between these two companies has led to the creation of a formidable entity that has expertise in all aspects of mining, processing, and manufacturing of steel.
On March 31, 2021, its authorized share capital was ₹2,400 crores, and its paid-up share capital was ₹790.19 crores. This indicates the company’s strong financial position and ability to raise funds for future growth and expansion. According to its statutory auditor, AM has a net value of $2,425.71 crores.
The successful execution of the resolution plan has brought a sense of relief to all stakeholders involved. The total consideration amount of ₹897 crores has been distributed among secured financial creditors and operational creditors, including workmen and statutory dues. As per the plan, secured financial creditors will receive ₹810 crores, while operational creditors will receive ₹12 crores, ensuring that all parties are treated fairly. The success of the resolution plan is a testament to the importance of sound financial management and effective decision-making in ensuring business continuity.
The equity infusion of ₹75 crores is another positive aspect of the Resolution Plan by NCLT indicating a healthy recovery for all stakeholders involved. This marks a significant milestone in resolving the financial distress of the company and ensuring its long-term sustainability.
Senior Advocate Ravi Kadam is a prominent name in the legal fraternity. He represented AM Mining in a case where his team, including Advocates Meghna Rajadhyaksha, Kriti Kalyani, and Harit Lakhani, worked tirelessly to achieve a favorable outcome. As a part of the team at Shardul Amarchand Mangaldas & Co. Ravi Kadam has proved his mettle time and again.
For CoC, senior attorney Soli Cooper attended alongside attorneys Shahezad Kazi, Tripti Sharma, and Utkarsh Trivedi who had been advised by S&R Associates.
