The resolution process for Essar Steel which has been delayed due to the ineligibility of bids received in the first round of bidding is likely to be granted some time beyond the stipulated 270 days to prevent the company from being liquidated, sources told FE. “The time spent in litigation to ascertain the legitimacy of the bids is likely to be exempted from the 270-day period. This will provide some extra cushion for the process to be completed,” a banker with a large public sector bank said on condition of anonymity. The last date for submitting resolution plans in the second round of bidding is April 2. “While every effort will be taken to complete the process in time after the new bids are submitted, we cannot rule out the possibility of further litigation. It would be good to have some additional time on hand,” the banker quoted above said.
The 270-day deadline for Essar Steel ends on April 29. As per the Insolvency and Bankruptcy Code (IBC), 2016, a resolution plan has to be finalised and approved within 270 days of a company’s admission to the National Company Law Tribunal (NCLT). In the absence of an approved resolution plan, the company would be liquidated at the end of the 270-day period. In the first round of bidding, the information memorandum was issued on September 1, 2017, resolution plans were invited on December 24, 2017 and the last date for submission of bids was February 12, 2018. The resolution professional (RP) for Essar Steel, Satish Kumar Gupta, his advisors and the committee of creditors (CoC) had been unable to reach a decision on the bids received from ArcelorMittal and Numetal. Consultancy firm Grant Thornton and law firm Cyril Amarchand Mangaldas were the two advisors to the RP on this matter.
Last week, the bids were disqualified by the CoC in the context of the amendment to the IBC, which categorically states that promoters of defaulting companies cannot bid unless they repay all the outstanding loans before submitting their resolution plan. The two key bidders in the first round, ArcelorMittal and Numetal, have moved the NCLT against their disqualification in the first round. The NCLT is likely to give its order on this issue on April 4. Essar Steel is among the 12 companies which the Reserve Bank of India had asked banks to refer to the bankruptcy court. Essar Steel, which has capacity of 9.7 MTPA, owes close to Rs 50,000 crore to lenders.
