Within hours of Essar Steel shareholders offering to clear all dues of lenders for withdrawal of the insolvency process, ArcelorMittal said that the withdrawal from the IBC process is not possible as expressions of interest have already been issued.
ArcelorMittal, which was selected preferred bidder by lenders of Essar Steel, has hit back at the Rs 54,389 crore offer made by the Ruias, saying that withdrawal of the IBC process against the bankrupt company is not possible as per the law.
Essar Steel shareholders have offered to pay an aggregate of Rs 54,389 crore including Rs 47,507 crore upfront cash payment to clear all dues owed to lenders, nearly 14 months after the company was admitted for the insolvency process.
The offer made by Essar Steel shareholders is higher than ArcelorMittal’s total offer of Rs 50,000 crore, but it will stand only if the debt-laden company exits the IBC proceedings as Section 29A bars wilful defaulters, defaulter promoters and related parties from acquiring other NPA accounts.
Within hours of Essar Steel shareholders offering to clear all dues of lenders for withdrawal of the insolvency process, ArcelorMittal said that the withdrawal from the IBC process is not possible as expressions of interest have already been issued. The Lakshmi Mittal company said that expressions of interest for Essar Steel were issued in October 2017.
“Our understanding is that the IBC’s section 12A does not apply to the resolution process of Essar Steel. Section 12A clearly states that any application to withdraw must be submitted prior to issuance of the invitation for expressions of interest and must be accompanied by a bank guarantee for the specified amounts,” ArcelorMittal said in a statement to FE Online.
Moreover, the company pointed out, the application to withdraw from the IBC process must be accompanied by the bank guarantee. “We expect the process to continue as per the clear terms of the IBC,” ArcelorMittal said.
ArcelorMittal was recently declared preferred bidder by lenders of Essar Steel after it committed to paying back outstanding dues of Uttam Galva Steel and KSS Petron. On October 4, the Supreme Court, while declaring bids submitted by both ArcelorMittal and VTB-backed Numetal ineligible under section 29A, gave another chance to them up on clearing dues.
While Numetal, which the court observed had “looming presence” of Ravi Ruia’s son Rewant Ruia, failed to clear Rs 49,000 dues of Essar Steel, ArcelorMittal settled the overdue. Later, ArcelorMittal increased its offer from a total of Rs 43,000 crore to Rs 50,000 crore.
Meanwhile, Vedanta — another bidder for Essar Steel — has requested the top court for a chance to revise its offer. Vedanta had offered a total of Rs 41,000 crore for the company.
Essar Steel was one of the first and biggest twelve NPA accounts identified by the Reserve Bank of India for immediate resolution. Against the 270-day deadline, the case got dragged for 14 months due to lack of clarity on section 29A. However, time lost in courts is excluded from the resolution period.