Essar Steel lenders to give time to bidders to cure ineligibility

The committee of creditors (CoC) in the Essar Steel insolvency resolution case has decided to issue notices, in compliance with the National Company Law Tribunal (NCLT) Ahmedabad Bench’s order of April 19, to ArcelorMittal and Numetal to cure their ineligibility.

The notice, which has not yet been officially issued, will ask bidders ArcelorMittal and Numetal to comply with the NCLT Bench order, said a source.

ArcelorMittal may have to clear outstanding dues totalling Rs 70 billion of two stressed asset accounts — Uttam Galva Steels and KSS Petron — that it was a promoter of until recently, if it wishes lay its claim as an eligible bidder.

On the other hand, Rewant Ruia, a member of the Ruia family who are the promoters of Essar Steel, will have to exit Numetal.

If the firms do not comply with the CoC’s notice, the lenders and resolution professional (RP) will go to the NCLT and seek more time for a fresh round of bids, in compliance with the Ahmedabad Bench’s order.

The source also said that Vedanta had also intimated to Essar Steel’s lenders that “they are willing to match the highest bid”. Vedanta’s letter cites the Kolkata NCLT Bench order of April 17, wherein Vedanta’s bid was permitted to be considered by the Electrosteel Steel’s lenders in the interest of higher revenue realisation, the source said.

Business Standard spoke to Anil Agarwal, chairman of Vedanta Resources, who declined to offer any comment. The Ahmedabad NCLT Bench had said last week that the Essar Steel’s RP had not placed the resolution plans of either company before the CoC before rejecting them on grounds of violating Section 29A of the Insolvency and Bankruptcy Code (IBC).

Essar Steel