One of the top 12 bankrupt companies identified for immediate resolution was Essar Steel. However, its resolution process has been anything but immediate. Here's the complete timeline of twists and turns in the race between ArcelorMittal and Numetal.
(Update: The SC has given two weeks time to ArcelorMittal and Numetal to submit revised bids after paying any outstanding dues. If the account is not resolved in eight weeks, it will go into liquidity)
One of the top 12 bankrupt companies identified for immediate resolution was Essar Steel. However, its resolution process has been anything but immediate. The case is way past its 270-day timeline, even as some of the similar bankrupt steel companies have found new owners. The reason: Legal interpretation and challenges of the newly-adopted Insolvency and Bankruptcy Code (IBC).
Essar Steel’s outstanding loan was Rs 45,600 crore when it was identified in the ‘Dirty Dozen’ list of the Reserve Bank of India. When the RBI’s decision for its immediate resolution survived court battles, the company got embattled in the long-drawn fray between Lakshmi Mittal’s ArcelorMittal and Russia’s VTB Capital-backed NuMetal Mauritius.
As against 270 days (9 months), it has been 1 year 3 months and 18 days, and the Supreme Court has reserved its verdict on the case, which is most likely to settle this resolution process – for once and all! The time lost in courts, however, is excluded from the 270-days resolution period.
“The insolvency proceeding is far from over, this case will be a test case for IBC for levelling the playing field in bidding wars, clarifying the law with respect to Section 29A and the settling the law on the resolution process as a whole. The Supreme Court, in its judgment which is yet come to out, is expected to clear the air on the powers of the COC, the bidding process etc,” Punit Dutt Tyagi, Executive Partner of Lakshmikumaran & Sridharan Attorneys told FE Online.
Essar Steel IBC case: A timeline of twists and turns in the race between ArcelorMittal and Numetal
May 5, 2017: The central bank is vested with more powers to fix bad loans issue in the banking system.
June 12, 2017: The RBI identifies 12 accounts for immediate resolution under the IBC.
June 27, 2017: Insolvency proceedings begin against Essar Steel in National Company Law Tribunal (NCLT).
July 4, 2017: Essar Steel challenges the RBI’s decision in Gujarat High Court.
July 17, 2017: After hearing both sides, Gujarat HC dismisses Essar Steel’s petition on the RBI’s insistence that the company was far from the debt-restructuring process.
August 2, 2017: NCLT admits Essar Steel for insolvency proceedings under the IBC. Satish Kumar Gupta is appointed Resolution Professional (RP) of the company.
October 2, 2017: Expression Of Interest (EOIs) is invited by RP for Essar Steel.
November 2017: Essar Steel’s parent company Essar Group is learnt to be one of the bidders.
November 23, 2017: Section 29A is introduced via Ordinance to bar wilful defaulter, defaulter promoters and related parties from bidding.
February 12, 2018: First round of bidding takes place: Numetal and ArcelorMittal submit bids.
February 23, 2018: Lakshmi Mittal meets Finance Minister, makes case for being the best fit for acquiring Essar Steel.
March 2018: RP holds both bids ineligible due Numetal’s connection with the Ruias and ArcelorMittal’s stake in an NPA account. Rewant Ruia, son of Essar Group’s Ravi Ruia, was a beneficiary in Numetal. ArcelorMittal held stakes in loan defaulter Uttam Galva, while Lakshmi Mittal held stakes in defaulter KSS Petron.
March 20, 2018: Numetal moves NCLT challenging the rejection of the bid.
March 26, 2018: ArcelorMittal also challenges disqualification in NCLT.
April 2, 2018: RP invites fresh bids.
April 19, 2018: NCLT Ahmedabad asks RP to re-examine first round of bids, saying RP rejected their offer without putting it in front of the Committee of Creditors (CoC).
September 7, 2018: National Company Law Appellate Tribunal (NCLAT) holds Numetal’s bid valid after it severs ties with Ruias. ArcelorMittal is asked to clear dues of Rs 7,000 crore of Uttam Galva and KSS Petron in three days.
September 10, 2018: ArcelorMittal revises offer to Rs 42,000 crore, including Rs 7,000 crore of past dues. Essar Steel had offered Rs 37,000 crore.
September 12, 2018: Numetal challenges NCLAT decision of allowing ArcelorMittal a chance to clear dues. ArcelorMittal agrees to pay Rs 7,000 crore only if it emerges successful bidder.
September 27, 2018: The Supreme Court reserves verdict on the case.
October 4, 2018: The Supreme Court gives one more chance. Asks Numetal and ArcelorMittal to submit revised bids after paying outstanding dues in two weeks. If the account is not resolved in eight weeks, it will go into insolvency.