Mumbai: The State Bank of India (SBI) has withdrawn an insolvency petition against Mumbai-based Uttam Galva Steels Ltd. The state-run lender’s move came after ArcelorMittal paid 7,469 crore to clear outstanding debts of Uttam Galva and KSS Petron, two companies in which Lakshmi Niwas Mittal had been a promoter.

ArcelorMittal cleared the debts to become eligible to bid for debt-laden Essar Steel Ltd. Lenders to bankrupt Essar Steel last month accepted the resolution plan submitted by a joint venture of ArcelorMittal, promoted by Mittal, and Japan’s Nippon Steel and Sumitomo Metal Corp.

On Thursday, Meghna Rajadhyaksha, partner at law firm Shardul Amarchand Mangaldas, representing SBI, informed the tribunal that the lender has decided to withdraw the petition.

The NCLT, presided by V.P. Singh and Ravikumar Duraisamy, accepted SBI’s request.

SBI filed the bankruptcy petition against Uttam Galva after the company defaulted on 1,486 crore of its total outstanding of 1,832 crore. The Mumbai-based listed steel company’s total dues stood at 6,880 crore as of September 2017. “We are unable to comment anything on the development or on our future strategy at this point in time," Ankit Miglani, managing director and part of Uttam Galva’s founding family said in an interview. “We are still studying the situation." ArcelorMittal did not respond to an email query.

Uttam Galva is part of Reserve Bank of India’s so-called second list of defaulters, against whom the central bank had directed swift action.

On 24 March, Uttam Galva informed the exchanges it had received approvals from BSE and the National Stock Exchange to declassify the world’s largest steelmaker ArcelorMittal as a promoter of the company. ArcelorMittal had held a 29.1% stake since 2009 in the company.

However, it asked Miglanis, founders of Uttam Galva to buy its stake in the firm to be qualify for bidding for another stressed asset, Essar Steel Ltd.

On 4 October, the Supreme Court granted a final opportunity to ArcelorMittal and Numetal Mauritius—the then two frontrunners for Essar Steel—to settle outstanding dues in related companies and submit fresh bids. ArcelorMittal subsequently paid 7,469 crore (around $1 billion) to the financial creditors of Uttam Galva and KSS Petron.

Even though the flagship company has managed to come out of the woods, two subsidiaries Uttam Value Steel and Uttam Galva Metallics are still under the Corporate Insolvency Resolution Process (CIRP), as they owe banks 3,200 crore and 2,200 crore, respectively.

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