NCLT directs Essar Steel lenders to consider Numetal, ArcelorMittal bids
NCLT asked the consortium of 31 lenders and the RP of Essar Steel to reconsider the bids submitted by both Numetal and ArcelorMittal
Ahmedabad: In a major victory for Numetal and ArcelorMittal, the Ahmedabad bench of the National Company Law Tribunal (NCLT) on Thursday lenders and the resolution professional of the bankrupt Essar Steel to reconsider their first bids.
Pronouncing its order on Thursday, NCLT adjudicating authority Manorama Kumari and Harihar Prakash Chaturvedi noted that certain provisions of the Insolvency & Bankruptcy Code were not followed by the committee of creditors (CoC) and the resolution professional (RP) while disqualifying both the bids earlier.
The bench asked the consortium of 31 lenders and the RP to reconsider the bids submitted by both Numetal and ArcelorMittal in the first round on 12 February. While sending the first bids once again to the CoC and the RP, the NCLT said certain provisions as mentioned in the section 29(a)(1) and in the sub-section 4 of section 30 of the IBC were not followed while disqualifying the first bids.
Both the petitioners, Numetal and ArcelorMittal, welcomed the verdict. “We welcome the NCLT order returning the matter back to the creditors for reconsidering our original bid. We have put forth a very compelling resolution plan both industrially and financially. We hope our proposal will be considered by the CoC with a fair and holistic view,” a Numetal spokeman said in a statement.
Similarly, ArcelorMittal said it has always maintained that it was eligible to bid for Essar Steel. “ArcelorMittal, in partnership with Nippon Steel and Sumitomo Metals, is the most credible bidder for Essar Steel and will bring considerable value to the Indian steel industry. We had made a strong offer backed up by a detailed industrial plan and now hope for a swift resolution,” it said in a statement.
Without elaborating much about the fate of the second round of bids submitted on 2 April, which are yet to be opened, the tribunal observed that inviting the second round of bids at this stage is not required. At the second round, these two along with JSW Steel and Vedanta had submitted the bids.
Numetal and ArcelorMittal had moved the NCLT over their disqualification in the first round of bidding claiming that rules had been followed before submitting their bids. The case pertains to the lenders disqualifying the bids by ArcelorMittal and Numetal—the only two bidders for the crippled 10-million tonne Essar Steel at Hazira in Gujarat that owes more than Rs45,000 crore to over 30 banks-citing technical issues on 23 March which primarily means their ownership structure.
These companies challenged the lenders’ decision at the NCLT soon after they were disqualified. Following this, the NCLT allowed rebid till 2 April, ArcelorMittal along with Nippon of Japan, Anil Agarwal’s Vedanta and Numetal along with JSW Steel have put in bids.
These two bids were from the beginning questioned by the resolution professional and others as the promoters of both these firms were defaulters in other firms—the Ruias in Essar Steel and the Mittals in Uttam Galva.
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