MUMBAI|KOLKATA: A decision on the resolution of Essar Steel’s bankruptcy remained elusive though the committee of creditors on Tuesday appeared to move towards a third round of bids and grant more time for Numetal and ArcelorMittal to gain eligibility.
Two people familiar with discussions at the creditors meet on Tuesday said lenders believe it is difficult to ignore the resolution professi onal’s view that Arcelor and Numetal are ineligible to bid for Essar. The lenders found ArcelorMittal’s bid superior though they were not in a position to take a call on it, the two officials who did not want to be identified said.
Numetal is likely to appeal against a fresh round of bids with the appellate authority if the lenders decide to pursue that course of action. But Numetal’s legal counsel said he would not comment since there is no official communication from the CoC. In an email response to ET, Numetel declined to comment. Arcelor-Mittal too declined comment.
Lenders are racing against time to complete the transaction within the extended time limit court has granted. Other buyers are also seeking fresh bids.
JSW Steel sent a letter to the Essar Steel’s committee of creditors on Monday, seeking a new round. Lenders had to resume the process of deliberations regarding Essar Steel after the National Company Law Tribunal threw the ball back in the lenders’ court directing them to consider the first bid by the two instead of going for the second one.
Arcelor and VTB consortium where Rewant Ruia, a member of the Ruia family is a stake owner, have been in dispute over each other’s eligibility after the government amended the bankruptcy law prohibiting defaulters from bidding for assets under the Insolvency and Bankruptcy Code. The bankruptcy court said last week that ArcelorMittal must clear dues of two defaulting companies – Uttam Galva and KSS Petron- to be eligible for bidding while observing that it ‘has not found any illegality in decision of the resolution professional’ in declaring both the applicants – Numetal and ArcelorMittal – ineligible.
Both bidders moved the bankruptcy court objecting to the decision by resolution professional, Satish Gupta who declared them ineligible under Section 29A which bars defaulters from submitting resolution plan. The court also said the 270-day deadline to resolve the deadlock was extended by a month to May 28 as the dispute delayed the matter.
While the fight between the two bidders has delayed a decision on Essar Steel resolution, this could establish a procedure for future cases where defaulter promoters would be engaged in bidding for their own assets.
RP NOT ARBITRARY
The NCLT observed that “it cannot be said that there is patently illegality in the conclusion of the resolution professional (in declaring both bids ineligible) or that it acted arbitrarily in rejecting the resolution plan by relying on the legal opinion received and believed to be true by him and which were placed before CoC.”