The resolution of Essar Steel has been dragging on for about a year now with even the grace period of 90 days, after the stipulated 270 days, having been exhausted. While it is true many of the cases are complicated, including that of Essar Steel, both the National Company Law Tribunal (NCLT) and the appellate tribunal need to speed up the cases. In this case, both NuMetal and Arcelor Mittal were found by the Resolution Professional (RP) to be ineligible to participate in the bidding process: NuMetal because of its association with Rewant Ruia, son of the promoters of Essar Steel and Arcelor Mittal, because it owes bankers money, in its capacity as a promoter of Uttam Galwa Steel. Indeed, news reports say Arcelor Mittal has deposited an amount of Rs 7,000 crore in an escrow account, but has not yet repaid the lenders. To be sure, Section 29A was inserted into the IBC for the very purpose of ensuring that persons, including errant promoters, whose accounts have been classified as non-performing assets for a year or more, should be allowed to regularise the accounts—before they submit the resolution plan—and become eligible. The Ahmedabad bench of the NCLT had, in fact, set aside the RP’s decision to disqualify the first round of bids for Essar Steel. The judges are well within their rights to ask the Committee of Creditors (CoC) to reconsider the bids submitted by Arcelor Mittal and Numetal if they believe rules relating to 29(A) (c) and 30(4) of the IBC code are not being obeyed.
However, even as the insolvency process under the Insolvency and Bankruptcy Code (IBC) has been coming along nicely, it is unfortunate that litigation is hobbling some of the cases. To be sure, it was never expected to be smooth sailing given how promoters in this country are not used to giving up their companies, but it is encouraging that two fairly large, nearly-bankrupt steelmakers—Bhushan Steel and Electrosteel Steels—have found new buyers. Varying interpretations of the law by the NCLT benches have also resulted in delays—one bench has allowed the RP to accommodate bids, even if they are late; this is happening for Bhushan Power & Steel, where Liberty House’s bid is being considered although it came in well past the deadline. In the case of Binani Cement, where the matter went all the way to the Supreme Court, a decision is yet to be taken on whether Ultratech Cement is eligible to bid even though the Committee of Creditors has unanimously approved the resolution plan submitted by the company. Some uniformity in the application of the law would help as also some limits on timelines.