The committee of creditors (CoC) of Essar Steel on Wednesday heard out explanations from ArcelorMittal and Numetal, the two bidders in the race for the loss-making steelmaker. Both companies made presentations to establish their eligibility to bid for the steelmaker, bankers familiar with the development told FE. They said both bidders were accompanied by their sets of lawyers and experts who, over the course of four hours, explained why they think they are eligible under Section 29 (A) of the Insolvency and Bankruptcy Code (IBC). This, the bankers said, follows written submission by both parties earlier this week on the eligibility issue.
“The CoC will now look into the written submissions over the next couple of days and issue an order on their eligibility,” a lender said. Another banker FE spoke to said that the meeting was an opportunity to both bidders to explain their stand on eligibility following directions from the Ahmedabad bench of the National Company Law Tribunal (NCLT). In its April 19 order, NCLT Ahmedabad had asked Essar Steel’s CoC and resolution professional (RP) to reconsider the first set of bids received from Numetal and ArcelorMittal, granting an additional 30 days for the resolution process.
It had suggested that the two bidders be allowed an opportunity to rectify their bids to make them eligible. The NCLT had also observed that inviting a second round of bids without offering bidders an opportunity to rectify their bids was “prima facie invalid”. The second round of bidding had taken place after the CoC disqualified the first set of bids received from ArcelorMittal and Numetal.
The RP and CoC had disqualified ArcelorMittal’s bid since it was considered a promoter of Uttam Galva Steels and KSS Petron, both loan defaulters. Numetal’s bid was held to be ineligible since one of the persons associated with the company, Rewant Ruia, is related to the promoters of Essar Steel.
Satish Kumar Gupta, Essar Steel’s RP, had told the Ahmedabad NCLT that Numetal was incorporated on October 13, 2017, for the purposes of submission of the resolution plan. According to him, at the time of incorporation of the company, its entire shareholding was held by Aurora Enterprises (AEL), which was in turn held entirely by Aurora Holdings, which was in turn held entirely by Rewant Ruia (through a trust and another holding company).
According to the RP, at the date of submission of the Numetal resolution plan, (February 12, 2018), the shareholding of the applicant was 40% held by Crinium Bay, 25.1% by Indo International, 9.9% by Tyazhpromexport and 25% by AEL.
Lenders to Essar Steel include State Bank of India, Canara Bank, Punjab National Bank, IDBI Bank and ICICI Bank. The company, which has a steel-making capacity of 9.7 million tonnes per year, owes lenders over Rs 40,000 crore.