Russia's VTB Bank-led Numetal on Monday challenged the eligibility of ArcelorMittal to bid for bankrupt Essar Steel under the section 29 (A) of the Insolvency and Bankruptsy Code (IBC).
Russia’s VTB Bank-led Numetal on Monday challenged the eligibility of ArcelorMittal to bid for bankrupt Essar Steel under the section 29 (A) of the Insolvency and Bankruptsy Code (IBC).
Appearing on behalf of the company in the National Company Law Appellate Tribunal (NCLAT), senior counsel Mukul Rohatgi said 29 (A) (c) prohibits a person from submitting a resolution plan if such person fails to make payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of
As a promoter for two defaulting firms — UttamGalva and KSS Petron — ArcelorMittal has not yet paid the dues to become eligible to bid for Essar Steel. Mere transfer of dues to an escrow account does not mean that the amount has been paid.
“If they win, they would pay, if not, then it would be scrapped. The payment should have been upfront and should be paid before submission of bids,” Rohatgi said.
The NCLAT bench, headed by justice SJ Mukhopadhaya, will resume hearing the matter on July 4.
Rohatgi said Numetal has severed its association with Rewant Ruia, son of Essar Steel promoter Ravi Ruia, to become eligible to buy the steel company. While Numetal has submitted `37,000-crore bid, sources said ArcelorMittal has made an upfront offer of `30,500 crore and pledged another Rs 8,000 crore in the form of capital infusion into Essar Steel. Essar Steel owes financial creditors close to `50,000 crore.
The Ahmedabad bench of the National Company Law Tribunal (NCLT), in an order on April 19, had said 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 resolution professional (RP) Satish Kumar Gupta and the committee of creditors (CoC) to reconsider the bids in the first round, and granted an additional 30 days for the resolution process.
Rohatgi also questioned the impugned order of the National Company Law Tribunal that granted the world’s largest steelmaker 30 days time to cure its application.
Both the companies are arguing in the NCLAT over which bids should be valid – those in the first round or the ones in the second.