Renaissance Steel India will be challenging the resolution professional’s decision to declare Vedanta and Tata Steel as eligible bidders for Electrosteel Steels in the Kolkata bench of the National Company Law Tribunal (NCLT).
Abhishek Dalmia, chairman, Renaissance Group, said, “The reasons given for eligibility by the resolution professional were not substantive enough in our view. The legal move could be as early as Monday.”
Meanwhile, the resolution professional is also trying to bring the process to a logical conclusion. On Thursday, the committee of creditors met and took an independent decision that Tata Steel and Vedanta were eligible bidders. By consensus, Vedanta was selected as the successful resolution applicant for Electrosteel. Vedanta is said to have offered Rs 55 billion for Electrosteel, which owes banks Rs 103 billion.
Sources close to the development said Vedanta would now have to furnish a bank guarantee but Friday being a bank holiday, it might not be possible. The next step would be to issue a letter of intent, following which the resolution application would be filed with the NCLT.
The 270-day period for Electrosteel gets over on April 17. According to the Insolvency and Bankruptcy Code (IBC) rules, restructuring a company has to conclude within 180 days after the NCLT admits an insolvency case. This deadline can be extended by 90 days, after which extensions are not permitted. A company’s assets will be liquidated after 270 days.
Dalmia, however, pointed out he had the option of taking the case to the National Company Law Appellate Tribunal (NCLAT).
Renaissance, also a bidder for Electrosteel, had challenged the eligibility of the two bidders under Section 29A of the IBC. According to it, Tata Steel UK was guilty of an industrial accident and Konkola Copper Mines, a subsidiary of Vedanta Resources, was guilty of pollution in Zambia. Thus, both were ineligible to bid for the stressed asset.
Renaissance had moved the NCLT challenging the eligibility, and the Kolkata bench had given specific directions. In the first step, the resolution professional was to give reasons for the decision to Renaissance Steel, the applicant, in three days. Renaissance was allowed to submit its reply or objections in three days. And finally the RP was directed to place all the objections of the applicant with supporting documents before the CoC with a copy of the NCLT order for its independent consideration. The CoC, hence, met on Thursday, and after consideration decided to go ahead with the process.
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