Essar Steel's lenders vote for fresh bids as Numetal, ArcelorMittal's bids declared ineligible
21 Mar 2018
The consortium of lenders to Essar Steel led by State Bank of India on Wednesday rejected the bids by Numetal and ArcelorMittal for being ineligible under the amended Insolvency & Bakruptcy Code that debars related parties from bidding.
Esar Steel is undergoing bankruptcy proceedings after failing to repay Rs49,000 crore to lenders.
The decision to reject the bids was taken at a meeting of the Essar Steel's committee of creditors (CoC) today, who also discussed the option of going for a second round of bidding for Essar Steel.
The consortium voted for fresh bids for Essar Steel after the resolution professional oncluded that both offers — by ArcelorMittal and Numetal — were ineligible under the current Insolvency and Bankruptcy Code (IBC).
PTI reported citing a source, "The (Numetal and ArcelorMittal) were found to be ineligible under the Section 29 A of the IBC. They did not fall under the satisfactory criterion that the promoters' link should not be there or connected persons should not be there."
ArcelorMittal India was declared ineligible for its joint venture with Uttam Galva, which is at the NCLT awaiting resolution.
Numetal's bid was rejected since its minority shareholder Rewant Ruia is the son of Essar Steel co-founder Ravi Ruia, which makes him a "connected person" under the IBC clause that prevents promoters of defaulting companies from bidding.
Lenders have also set an April 2 deadline for the second round of bidding Essar Steel that owes over Rs 45,000 crore to over 30 bankers, the PTI report said, adding that if both the companies delink their connection from the promoters or regularise the loans they can bid again.
