India’s Appellate Tribunal NCLAT dismisses plea challenging Carval’s resolution plan for Uttam Value Steels under the Insolvency and Bankruptcy Code. In May, the National Company Law Tribunal (NCLT) had approved the sale of Uttam Value Steel and Uttam Galva Metallics to a joint venture formed by the New York-based investor group CarVal and London-based venture capitalist Nithia capital Resources following bankruptcy proceeding.
The company’s five operational creditors had moved the National Company Law Appellate Tribunal (NCLAT) against the NCLT order. The appellants plead for a stay on the NCLT approved Carval Resolution Plan. Uttam Value Steel has a total admitted debt of Rs30.03bn ($408.57mn).
Operational creditors are annoyed of the fact that they have been allocated a small amount of 0.18pc of their outstanding dues. The admitted operational debt of the appellants is Rs4,238.2mn, which is 80.88pc of the total operational debt of Rs5,240mn. The complaint rued that financial creditors, predominantly banks and financial institutions, are paid 41.75pc of their claims. Besides, the appellants also claimed that the investors lack technical expertise to run the plant as the Johannes Sittard, who had prior experience at Arcelor Mittal had resigned from Nithia Capital and Carval. The tribunal directed Carval to ensure that Sittard continues for a year or until the company’s operations stabilize. NCLAT found no merit in the operational creditors plea and rejected the same on Wednesday.
Uttam Value Steel has hot-rolled steel output of around 1mn mt in Wardha, Maharashtra. The plant is located in a coal belt. Its blast furnace consumes DRI and injection coal.