The bids of the two companies were termed ineligible due to the amendment to the Insolvency and Bankruptcy Code that bars promoters of defaulting companies from bidding for stressed assets.
The Ahmedabad bench of the National Company Law Tribunal (NCLT) on Tuesday adjourned the hearing on the petitions filed by ArcelorMittal and Numetal challenging the ineligibility of their bids for Essar Steel. The tribunal will now take up the matter on April 4 and has asked Numetal, ArcelorMittal and the resolution professional of Essar Steel to submit additional documents related to this matter by April 2. The committee of creditors (CoC) and the resolution professional (RP) had disqualified the bids by both the firms for Essar Steel. Numetal had filed an application on March 20 before the NCLT for declaration of eligibility from the tribunal, while ArcelorMittal India moved the tribunal on March 26 challenging the decision to declare its bid ineligible.
The bids of the two companies were termed ineligible due to the amendment to the Insolvency and Bankruptcy Code that bars promoters of defaulting companies from bidding for stressed assets. On Tuesday, Numetal counsel Mukul Rohatgi prayed that the resubmission of bids due on April 2 should be deferred till the matter is heard on merits. However, NCLT rejected this. It, however, asked the resolution professional not to take any decision on the bids until the final hearing. The bids will be required to be submitted as per the decision of the CoC on April 2. However, the CoC is not going to meet before April 5 while NCLT is slated to hear the matter on April 4. Darius Khambatta, counsel for CoC, told NCLT that both the companies can participate in the second round of bid. Meanwhile, ArcelorMittal on Tuesday said it intends to rebid for Essar Steel. “ArcelorMittal intends to rebid though we continue to strongly believe that our original offer is eligible. The outcome of the rebid remains subject to the outcome of the ongoing case at the NCLT,” a statement by the firm said.
“We agree wholeheartedly with comments made in the media that the spirit of 29A must be upheld. One should review statements made by the finance minister when the article was introduced; it makes clear that its purpose is to prevent previous defaulters from regaining control of the assets they have bankrupted at a haircut. Clearly that has no relevance to ArcelorMittal’s bid for Essar Steel,” the company said. FE had reported on March 22 that Essar Steel will see a second round of bidding as both the resolution bids submitted by ArcelorMittal and the VTB Bank-led Numetal have been disqualified by Essar Steel’s CoC. According to bankers, only the resolution applicants who had initially submitted expressions of interest (EOIs) for Essar Steel would be eligible to bid in the second round.
It is for this reason that the CoC turned down JSW Steel’s offer to participate in the rebidding process. JSW Group chairman Sajjan Jindal told reporters on Monday that though JSW Steel was willing to put in a competitive bid, its proposal was turned down by the CoC on the ground that it did not participate in the expression of interest stage the first time.