Payash Capital Singapore, a 49% stakeholder in Trinity Alternative Investment Managers Ltd (TAIML), has challenged the decision to include Arcelor Mittal in the race to acquire SREI's assets.
TAIML is an investment manager of alternate investment funds (AIFs) that is jointly promoted by SREI Infrastructure Finance Ltd (SIFL), with 51% stake, and balance 49% is held by Payash Capital Singapore PTE Ltd.
TAIML has filed claims worth Rs10,000 crore from Arcelor Mittal entities and Payash has challenged their inclusion in the SREI bid process will "hinder" TAIML's recovery.
Payash Capital, in a letter to the SREI administrator, has objected to the inclusion of Arcelor Mittal in bidding for SREI assets as it would "hinder and disrupt the ongoing recovery proceedings by TAIML against Arcelor Mittal."
TAIML and Arcelor Mittal companies have been engaged in a legal battle over payments of dues in Odhisha Slurry Pipeline.
Arcelor Mittal had acquired 100% stake on Odisha Slurry through its acquisition of Essar Steel in 2019 through IBC wherein 70% were initially held by IGOF-SMAIT managed by TAIML.
TAIML has contended that Arcelor Mittal entity, though emerging successful bidder for Odisha Slurry in 2020 with a proposal to infuse Rs2,400 crore capital in company and pay for usage, continued to use the pipeline by neither infusing capital nor paying for usage, resulting in huge loss to lenders.
TAIML has instituted several legal proceedings against ArcelorMittal entity (Arcelor Mittal Nippon Steel India Ltd) on account of TAIML's huge monetary claim to the tune of about Rs10,000 crore.
Payash Capital has expressed concerns that if Arcelor Mittal entity bids are accepted, and SREI data rooms are made available to them, it will compromise numerous confidential documents pertaining to TAIML litigation with the Arcelor Mittal entity and create a situation wherein they may be pressurised into withdrawing all litigations.
"TAIML has a fiduciary duty towards the investors to protect and maximise their investments."
Payash contends that Arcelor Mittal is ineligible to bid for SREI is as per provisions of IBC Section 29A(c) wherein person who at the time of submission of the resolution plan has an account of the corporate debtor shall not be eligible to submit a resolution plan and also from the fact that they have no NBFC (non-banking finance company) experience.
Notably, till date, the administrator has received interest from five bidders to acquire SREI assets—the Shon Randhawa and Rajesh Shah combine, the consortium of Varde partners and Arena Investors, Capri Global, the Arcelor Mittal-promoted AM Mining India, and Edelweiss ARC.
The last date of completion of the Resolution process was recently extended to 5th January, while that of submitting the final bids with a resolution plan to 25th November.
The RBI superseded the boards of 2 SREI companies in October last year and began the insolvency process by appointing the administrator.
It is estimated that SREI has total liabilities of around Rs18,000 crore in bank loans, and another nearly Rs10,000 crore of external commercial borrowings and bonds.
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