A decision on the bankrupt Essar Steel was pushed back even further on Tuesday, with the National Company Law Appellate Tribunal (NCLAT) scheduled to hear the case again only on July 23.
The NCLAT directed Essar Steel’s resolution professional (RP), committee of creditors (CoC) and the adjudicating authority not to pass any order, including liquidation, in the interim period.
Essar Steel’s resolution, which has seen ArcelorMittal and Numetal locked in a bitter battle, will miss its revised deadline of May 28. It had already surpassed its initial 270-day resolution period on April 28.
The NCLAT will have to hear multiple petitions, including whether the first or the second round of bids is eligible. The two-member bench of the NCLAT, headed by chairman justice SJ Mukhopadhaya, directed the RP to manage the day-to-day affairs of the company in the interim.
Pleading before the NCLAT for Numetal, senior counsel Mukul Rohatgi argued that the resolution plans submitted in the second round of bidding should be considered and the highest bid be selected.
Senior counsel Harish Salve, appearing on behalf of ArcelorMittal, opposed the plea, saying that only the first round of bids should be considered. ArcelorMittal has also challenged its disqualification in the first round of bidding.
“Despite always believing our bid to be eligible, ArcelorMittal demonstrated its commitment to India and to Essar Steel in confirming its intent to settle dues at companies in which we held a passive, minority shareholding,” it said in a written statement. “We believe we have appropriately addressed the questions the CoC had raised and that there should now be no doubt that we are fully eligible,” the company added.
Last week, Russia’s VTB Bank-led Numetal had petitioned the NCLAT that resolution plans submitted in the second round of bidding should be considered, and the highest bidder should be selected from it. The company’s counsel Rohatgi informed the appellate tribunal that Numetal has not only severed association with Rewant Ruia, son of Essar Steel promoter Ravi Ruia, to become eligible, it has also enhanced its bid amount to Rs 37,000 crore in the second round. He said that considering the second round of bids would help to realise the maximum value for the asset. Essar Steel owes close to Rs 50,000 crore to its financial creditors.
“Numetal has offered to maximise the debt recovery for the Indian lenders with a `37,000-crore cash offer besides injecting significant amount in the company and in opex and capex. We believe we are an eligible resolution applicant from day one as per IBC and neither Numetal nor any of its shareholders including Aurora has any overdue loans with Indian lenders. In any case other shareholders of Numetal have bought out Aurora shares while maximising the bid offer in the second round and hence we are fully eligible,” Numetal said in a statement.
ArcelorMittal, the only other company to have bid in the first round, opposed the petition to allow the second round of bids to be opened, and said only the first round of bids should be considered. It is understood to have made an upfront offer of Rs 30,500 crore and another Rs 8,000 crore in the form of capital infusion in the company.
ArcelorMittal has transferred Rs 7,000 crore into a State Bank of India escrow account for the payment of dues of Uttam Galva and KSS Petron, defaulter firms in which it held stakes, in an attempt to make its bid for Essar Steel eligible. However, the money will be released from the escrow account only if its bid for Essar Steel is recognised as the winning bid.
The Ahmedabad bench of the National Company Law Tribunal (NCLT), in an order on April 19, had said that inviting a second round of bids without offering bidders an opportunity to rectify their bids was “prima facie invalid”. It had directed Essar Steel’s RP Satish Kumar Gupta and the CoC to reconsider the bids in the first round, and granted 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.
ArcelorMittal’s first bid for the bankrupt Essar Steel was disqualified by the RP on the ground that it was a promoter of Uttam Galva and KSS Petron. Numetal’s bid was disqualified since one of the persons associated with the company, Rewant Ruia, is related to the promoters of Essar Steel. The shareholders of Numetal include Russia’s VTB Bank and engineering firm Tyazhpromexport, financial investor Aurora Enterprises (in which Ruia has an interest) and commodity trading company Indo International Trading.