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The State Bank-led consortium of lenders to Essar Steel today rejected the bids by both Numetal as well as ArcelorMittal after finding them to be ineligible under the amended Insolvency & Bakruptcy Code that debars related parties from bidding.
The decision was taken at a meeting of the Essar Steel's committee of creditors (CoC) here today.
"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," a banking source told PTI.
While ArcelorMittal India has been found ineligible for its joint venture with Uttam Galva, which is at the NCLT awaiting resolution, Numetal's bid was done in by the fact that one of the promoters of the special purpose vehicle is Rewant Ruia, the son of Essar Group promoter Ravi Ruia, who is one of the original promoters of Essar Steel.
Lenders have also set an April 2 deadline for the second round of bidding Essar Steel that owes over Rs 450 billion to over 30 bankers.
Bankers said if both the companies delink their connection from the promoters or standardise the loans they can bid again.
It can be noted that the recent amendments to the IBC had added a new clause to Section 29 (A) which debars related parties from bidding for NCLT assets.
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