On last Thursday, lenders to Electrosteel Steels selected Vedanta as the highest bidder for the company at a meeting held in Kolkata.
The resolution professional (RP) of Electrosteel Steels on Monday submitted Vedanta’s resolution plan before the Kolkata bench of National Company Law Tribunal (NCLT) for its final disposal, even as rival bidder Renaissance Steel said it is opposing the lenders’ decision to permit the Anil Agarwal-promoted company to participate in the insolvency process on the grounds that it is ineligible.
In his submission before a division bench, comprising justices Jinan KR and Madan Balachandra Gosavi, Renaissance Steel’s counsel Ratnanko Banerjee said, “We are opposing the committee of creditors (CoC)’s decision on eligibility of Vedanta and Tata Steel. We are also opposing the resolution plan (of Vedanta).”
“We will file two applications, challenging the CoC’s decision that both Vedanta and Tata are eligible bidders,” Banerjee added.
While Renaissance’s objection is with specific reference to their bids for Electrosteel Steels, the final ruling on the eligibility of Tata Steel and Vedanta has wider ramifications as the two companies have also bid for other assets under the insolvency process and their eligibility or ineligibility would impact all their bids.
On last Thursday, lenders to Electrosteel Steels selected Vedanta as the highest bidder for the company at a meeting held in Kolkata. In that meet, the CoC overruled the objections from Renaissance Steel, which had questioned Vedanta and Tata Steel’s eligibility to bid. The Anil Agarwal-led company is believed to have made an offer of close to `5,000 crore for the beleaguered steel firm.
In a stock exchange filing on Saturday, Vedanta said it has “accepted the terms” of the Letter of Intent (LoI), which was issued to the company by the CoC, with the lenders declaring the diversified natural resources company as the “successful resolution applicant” for the insolvent steel maker.
Electrosteel Steels’ RP Dhaivat Anjaria, a partner at PwC, on Monday submitted Vedanta’s resolution plan, which had already been approved by the lenders, before the Kolkata bench of the NCLT for its final disposal. Anjaria also submitted a progress report on the ongoing corporate insolvency resolution process. The next hearing on the case is scheduled for April 4.
Notably, Electrosteel owes lenders close to Rs 11,300 crore. Should Vedanta finally take control of the bankrupt Electrosteel, it would be the second closure following Tata Steel’s winning bid for Bhushan Steel. The March 29 meeting of CoC follows a nudge by the NCLT, asking it to meet at the earliest. The committee discussed Renaissance Steel’s objections to bids by Tata Steel and Vedanta with regard to their eligibility under Section 29 (A) of the Insolvency and Bankruptcy Code (IBC).
The resolution professional had received bids from Vedanta, Edelweiss Alternative Asset Advisors, Tata Steel and Renaissance Steel in January this year. On July 21 last year, the NCLT had admitted State Bank of India’s (SBI) insolvency petition against Kolkata-based Electrosteel Steels. The company had been referred to the bankruptcy court under Section 7 of the IBC following a nudge from the Reserve Bank of India (RBI). The 270-day deadline for insolvency resolution process completion will expire on April 17. On last Monday, the tribunal had asked Anjaria to convene the CoC meet as early as possible.
On March 20, the Kolkata bench of the NCLT had directed the RP to place all the objections of Renaissance Steel against Vedanta and Tata Steel before the CoC for an “independent consideration” of the committee. This was after Abhishek Dalmia-led Renaissance Steel moved the tribunal asking it to prevent Anjaria from proceeding with further negotiations with Vedanta, the highest bidder, till the issue of eligibility of the Anil Agarwal-led company and Tata Steel was determined.
Renaissance Steel had alleged that resolution applicants Vedanta and Tata Steel were not eligible to bid for the Kolkata-based insolvent steel maker as per Section 29A of the IBC. In his order, justice Jinan KR had said, “A copy of the decision taken by the RP in respect of eligibility of resolution applicant Tata Steel and Vedanta as per Section 29A, with supporting reasons for taking the decisions is to be given to the applicant (Renaissance) within three days of date of this order with proper acknowledgement.”