Sajjan Jindal after losing Bhushan Steel to Tata Steel was eyeing another bankrupt company Essar Steel but was not allowed to enter the race.
Sajjan Jindal after losing Bhushan Steel to Tata Steel was eyeing another bankrupt company Essar Steel but was not allowed to enter the race. The JSW Group Chairman is alleging that the lenders did not allow his company to enter the bidding process. He said that the lenders were making a mockery of the IBC law by allowing defaulting promoters to bid for the company. The Committee of Creditors (CoC) for Essar Steel rejected us as we did not participate in the first expression of interest, Sajjan Jindal told reporters.
He said that while his company was not allowed, defaulting promoters were being allowed in the race for Essar Steel if sold their shares in the defaulting company which is the mockery of the law. Without taking any names, Sajjan Jindal said that unless the law is changed to allow defaulting promoters, allowing them to bid for Essar Steel after they sell their shares and walk out is “not fair.”
Last week, bids for Essar Steel, both by Lakshmi Mittal’s ArcelorMittal and Numetal Mauritius were rejected as they were found ineligible under Section 29A of the Insolvency and Bankruptcy Code (IBC). Last October, the government amended the IBC law to bar wilful defaulters, defaulting promoters and related parties from the bidding process.
While ArcelorMittal’s bid has been rejected the company maintained that it would be re-bidding under the fresh bidding process. The Committee of Creditors (CoC) has kept the option open for ArcelorMittal and Numetal Mauritius to bid during fresh bidding if they strip their connection with the NPA accounts.
In case of ArcelorMittal, both ArcelorMittal and Lakshmi Mittal held stakes in companies — Uttam Galva Steel and KSS Petron Private Limited respectively — that were classified NPAs. Just before bidding for Essar Steel, stakes were sold in these companies but CoC argued that they continued for more than a year in these companies after they were classified NPAs.
ArcelorMittal is pinning hopes to the fact that if with their help, Uttam Galva Steel settles its dues with the lenders, it will be eligible to re-bid for Essar Steel. In case of Numetal Mauritius, it is being reported that if the company drops son of Essar Steel’s original promoter Ravi Ruia’s son Rewant Ruia as its beneficiary, it could also become eligible.