Essar Steel’s bidding deadline under the Insolvency and Bankruptcy Code (IBC) for a loan default of Rs 37,284 crore has closed and only two companies — Lakshmi Mittal’s ArcelorMittal and Numetal Mauritius, in which the Ruias are the minority partner — have turned out to be only bidders, ET Now quoting sources said. It was also reported that Tata Steel, Vedanta and JSW Group did not bid for the company.
Essar Steel was one of the 12 companies identified by the Reserve Bank of India (RBI) for immediate resolution under the IBC through the National Company Law Tribunal (NCLT). However, there is no clarity on bidding by Nippon Steel.
Commenting on the bidding for Essar Steel, Lakshmi Mittal, Chairman and CEO, ArcelorMittal, said, “Essar provides a compelling opportunity for ArcelorMittal to enter the high growth Indian steel market. The offer submitted today by AMIPL includes a detailed investment plan to address operational issues in Essar’s existing asset base.”
Lakshmi Mittal further added that the company’s expertise and operating prowess make them uniquely equipped to make a successful turnaround of Essar Steel that will be beneficial to company’s stakeholder.
According to media reports, the other bidder Numetal Mauritius does not violate the related party clause of the IBC law as the Ruias are the minority partner. In the winter session of the Parliament, the IBC amendment, brought-in via ordinance route by the Narendra Modi government to bar wilful defaulters and defaulting promoters from the bidding process, was passed.
NCLT had admitted insolvency proceeding against Essar Steel in August last year. In October, it was reported that its parent company Essar Group was one of the bidders, saying that the IBC law then allowed promoters to bid for their company. A month later, the government blocked bidding by defaulting promoters by amending the IBC loophole through the ordinance route.
When identified by the RBI, Essar Steel cried foul, saying that it belonged to the other 488 companies which were given six months time to restructure their debt. They challenged RBI’s decision in Gujarat High Court, which was later dismissed and the company was admitted for insolvency proceedings.