Mumbai: A day after rejecting bids from Numetal Mauritius Ltd and ArcelorMittal, lenders to Essar Steel Ltd reiterated they were not planning to invite new bidders for the debt-laden company, according to two people familiar with the development.

Only those who had submitted expressions of interest (EoI) in the initial round of bankruptcy auction will be allowed to participate in fresh bidding.

The EoIs were submitted by Tata Steel Ltd, Numetal Mauritius, Nippon Steel & Sumitomo Metal Corp., Vedanta Group, Arcelor Mittal and Steel Authority of India Ltd (SAIL).

“Lenders believe that inviting new bidders will result in repeating the entire diligence process which may lead to missing the 29 April deadline for completing the IBC process," said one of the bankers cited earlier.

“Also, it’s important to keep new bidders outside to maintain the sanctity of the process," the banker added.

Mint had reported on Wednesday that JSW Steel Ltd may bid for the stressed asset if lenders permits new bidders. JSW has submitted a letter to the insolvency resolution professional showing interest in the bidding process.

“If the firm is not allowed to bid in the fresh round, it will consider joining hands with other eligible bidders who have already submitted EOIs," said another person close to the development.

A JSW Steel spokesperson declined to comment.

On Wednesday, the committee of creditors decided to reopen bidding after declaring Arcelor Mittal and Numetal Mauritius ineligible under Section 29 (a) of the insolvency and bankruptcy code.

The clause bars wilful defaulters, defaulters whose dues had been classified as non-performing assets (NPAs) for more than a year, and all related entities of these firms from participating in the resolution process.

In Arcelor Mittal’s case, the firm had a stake in Uttam Galva Steel Ltd, a delinquent borrower, while in Numetal’s case, one of its minority shareholders is owned by a trust that has Rewant Ruia, son of Essar Group’s co-founder as a beneficiary.

“Both companies will have to make themselves eligible before they can submit fresh bids," said the first banker.

“Arcelor will have to declassify themselves as a promoter of Uttam Galva whereas VTB will have to drop Rewant Ruia as consortium partner to be to be eligible to bid," he added. VTB is the largest shareholder of Numetal.

On Wednesday, before the creditor panel arrived at its decision, Numetal filed a petition at the Ahmedabad bench of National Company Law Tribunal (NCLT) to determine its eligibility as a resolution applicant. The firm said the creditor panel decision would be subject to the order passed by the court.

Essar Steel is one of the 12 bad loan accounts referred by the Reserve Bank of India for early resolution under the insolvency code. It owes around Rs49,000 crore to its lenders.

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