India’s bankruptcy court had approved ArcelorMittal’s USD 6 billion bid for debt-ridden Essar on March 8, potentially ending months of court battles and opening the sector to outsiders.
On Friday, the Supreme Court halted ArcelorMittal’s payment while a bankruptcy appeals court - the National Company Law Appellate Tribunal - rules on various appeals in the case.
“(The court) asked the parties to maintain status quo with respect to the March 8 order,” said a lawyer working on the case, referring to an order by India’s bankruptcy court, the National Company Law Tribunal.
The lawyer, who was at the court when the ruling was made, did not wish to be named as he is not authorised to speak to the media.
ArcelorMittal did not have any immediate comment. Essar Steel declined to comment.
The rupee weakened by 0.3 per cent to 69.32 to the dollar following Friday’s ruling, on concerns of subdued dollar inflows.
Essar Steel, with debts of 50.78 billion rupees (USD 725.38 million), was among the so called dirty dozen - twelve large steel and other infrastructure companies which defaulted and were referred to India’s bankruptcy court in 2017.
The company became synonymous with the tardy pace of debt resolution by Indian banks saddled with billions of dollars of bad loans.
When a new bankruptcy law was introduced in 2016 by Prime Minister Narendra Modi, it was seen by investors as a bold move which would ease lending pressure on banks and boost private investment.
Local steel company JSW Steel Ltd, metals conglomerate Vedanta Ltd, Russian bank VTB and the erstwhile owners of Essar Steel had all tried to win the 10-million-tonne steel asset over the last two years.