ArcelorMittal and Numetal Mauritius, the only two bidders for bankrupt Essar Steel have been declared ineligible under the IBC and their bids have been rejected by the IRP. The Committee of Creditors will allow fresh bids next month.
ArcelorMittal and Numetal Mauritius, the only two bidders for bankrupt Essar Steel have been declared ineligible and their bids have been rejected. The two companies were facing the eligibility test under Section 29A of the Insolvency and Bankruptcy Code (IBC), which barred wilful defaulters, defaulting promoters, and related persons from bidding during the insolvency process.
Essar Steel’s Interim Resolution Professional (IRP) has declared Laxmi Mittal’s ArcelorMittal and Russia-based VTB investor group Numetal Mauritius bids ineligible, ET Now and CNBC-Tv18 reported quoting sources. The Committee of Creditors (CoC) has decided to invite new bids. Fresh bids by the two companies are subject to the condition that they need to fully comply with the IBC rule.
It is also being reported that Tata Steel, Vedanta, and Nippon Steel will be allowed to re-bid when it takes place on April 2. It was previously reported by Bloomberg that both ArcelorMittal and Numetal were involved in loan defaults in the past.
ArcelorMittal held stakes in a company identified by the Reserve Bank of India for insolvency proceedings, Uttam Galva Steel. Although, before bidding for Essar Steel, ArcelorMittal sold its entire stake in the company to its original promoters, it continued as its promoter for more than 12 months after it was declared as an NPA.
Similarly, in another case, Laxmi Mittal held stakes in KSS Petron Private Limited which was declared an NPA in 2015. Laxmi Mittal sold his stakes in the company before Essar Steel bidding. In case of Numetal Mauritius, Essar Steel’s promoter’s son Rewant Ruia is a beneficiary.
The Section 29A of the IBC was passed by Parliament in the Winter Session after it was introduced as an ordinance. The section bars wilful defaulters, promoters whose account has been classified NPA for over a year, any corporate debtor undergoing insolvency resolution, any person connected to any of the mentioned earlier, or the holding company, subsidiary company, associate company and related.