Lenders likely to meet on April 24 to chart future course of action
With the National Company Law Tribunal (NCLT) on Thursday asking the committee of creditors (CoC) to reconsider the bids of ArcelorMittal and Numetal for Essar Steel made in the first round, the focus has shifted back to the resolution professional (RP) who, bankers told FE, will have to ensure that the bids received from ArcelorMittal and Numetal in the first round meet the eligibility criteria, before a decision on the H1 bidder can be taken by the CoC. “After Thursday’s order, the RP will have to take necessary steps to ensure the bids are rectified so that they conform to Section 29 A. Only then can we take a call,” a senior banker said on condition of anonymity.
The Ahmedabad bench of the National Company Law Tribunal (NCLT) on Thursday asked the CoC to reconsider the bids of ArcelorMittal and Numetal for Essar Steel made in the first round. It observed that inviting a second round of bids was “prima facie invalid”.The CoC is understood to have disqualified ArcelorMittal and Numetal in the first as it believed they were not eligible as per Section 29 A of the Insolvency and Bankruptcy Code, 2016, which bars defaulting promoters from bidding for assets at the NCLT.
While ArcelorMittal was a promoter in Uttam Galva Steels that has defaulted on its loans, 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. Following the first round, ArcelorMittal is also believed to have infused close to Rs 3,000 crore in Uttam Galva to help it settle its dues. And the company has itself offered to settle creditors dues in full by inducting a foreign investor.
VTB Bank, the promoter of Numetal, has also declared its intent to buy out the stake of Aurora Enterprises to dissociate itself from Ruia. In fact, it had roped in JSW Steel for its bid in the second round, to strengthen its case. Bankers who are peeved at having to reconsider the bids they had rejected are likely to insist on the eligibility criteria being met fully before taking the process ahead. And this, sources told FE, could require Uttam Galva to take steps to shed the defaulter tag, even as Numetal may be required to distance itself from the existing promoters.
ArcelorMittal and Numetal did not comment on this matter. However, sources said Numetal is open to changing its shareholding pattern if required. ArcelorMittal has sold its 29% stake in UttamGalva in February. However, bankers are not certain if that would make ArcelorMittal eligible to bid.