New Delhi: The National Company Law Appellate Tribunal (NCLAT) has pushed back the decision on the bankrupt Essar Steel and scheduled the hearing of the case again on July 23. Further, the NCLAT has told the resolution professional (RP), committee of creditors (CoC) and the adjudicating authority of Essar Steel not to pass any order, including liquidation till July 23.
It should be noted that the resolution of Essar Steel, after surpassing the initial 270 day resolution period on April 28 will once again miss out the revised deadline of May 28. The process has also witnessed ArcelorMittal and Numetal locked in a bitter battle.
The NCLAT bench headed by Chairman Justice S J Mukhopadhyaya has asked the RP to manage the day-to-day affairs of the company till the resolution process and it will now be hearing multiple petitions which would include the petition regarding the eligibility of the first or the second round of bids.
Senior counsel, Mukul Rohtagi, on behalf of Numetal, has pleaded before NCLAT and argued that the resolution plans submitted in the second round of bidding should be reconsidered and the highest bid be selected.
While senior counsel Harish Salve, on behalf of ArcelorMittal, opposed it by giving his argument that only the first round of bids should be considered. Notably, ArcelorMittal has also challenged its disqualification in the first round of bidding.
In a written statement, ArcelorMittal said, “Despite always believing our bid to be eligible, ArcelorMittal demonstrated its commitment to India and to Essar Steel in confirming its intent to settle dues at companies in which we held a passive, minority shareholding.”
Further adding to it, the company said, “We believe we have appropriately addressed the questions the CoC had raised and that there should now be no doubt that we are fully eligible.”
Numetal filed the petition last week saying that the resolution plans submitted in the second round of bidding should be considered and the highest bid should be selected from it. Giving the argument, Rohtagi informed the NCLAT that Numetal has not only served association with Rewant Ruia, son of Ravi Ruia – promoter of Essar Steel but it has also enhanced its bid amount to Rs 37,000 crore in the second round. He argued that to realize the maximum value for the asset it is important to consider the second round of bids.
Notably, Essar Steel owes close to Rs 50,000 crore to its financial creditors.
“Numetal has offered to maximise the debt recovery for the Indian lenders with a `37,000-crore cash offer besides injecting significant amount in the company and in opex and capex. We believe we are an eligible resolution applicant from day one as per IBC and neither Numetal nor any of its shareholders including Aurora has any overdue loans with Indian lenders. In any case other shareholders of Numetal have bought out Aurora shares while maximising the bid offer in the second round and hence we are fully eligible,” Numetal said in a statement.
ArcelorMittal, the only other company to have bid in the first round, opposed the petition to allow the second round of bids to be opened, and said only the first round of bids should be considered. It is understood to have made an upfront offer of Rs 30,500 crore and another Rs 8,000 crore in the form of capital infusion in the company.
Rs 7,000 crore has been transferred into escrow account of State Bank of India against the dues of Uttam Galva and KSS Petron by ArcelorMittal so that their bid is eligible. Though, the money from the escrow account will be released once and only when ArcelorMittal’s bid wins.
However, the Ahmedabad bench of the NCLAT said in an order on April 19 that invitation to the second round of bids was ‘prima facie invalid’ and that too without offering bidders an opportunity to rectify their bids. The RP of Essar Steel, Satish Kumar Gupta and the CoC were directed to reconsider the bids in the first round and they were given extra time of 30 days to process the resolution. The bench also suggested that two bidders should be allowed to rectify their bids so that they can be eligible.
The RP disqualified the first bid of ArcelorMittal on the basis that they were the promoter of Uttam Galva and KSS Petron, while the bid of Numetal was disqualified because the company was related of the promoter of Essar Steel.