NCLT rules second round of bids for Essar Steel invalid

The Ahmedabad bench of the National Company Law Tribunal (NCLT) today said invitation of second round of bids for bankrupt Essar Steel was invalid. It said the resolution professional had not followed due procedure.

NCLT allowed pleas of Numetal and ArcelorMittal contesting disqualification in first round. It has asked CoC & resolution professional to relook at both the bids from the first round. Both the bidders had approached the tribunal, against the second round of bids claiming their bids should be considered eligible.

Both bids now have to be shared and evaluated by Committee of Creditors (CoC) before taking any decision, it ruled.

Bids by ArcelorMittal and Numetal were considered ineligible because the Insolvency and Bankruptcy Code (IBC) does not allow promoters of a defaulting company to submit a resolution plan.

Promoters of the Essar Group, the Ruia family, were seen to have an interest in the bidding entity while ArcelorMittal was considered as a promoter of Uttam Galva Steel Ltd., a company that has defaulted on its bank loan. Both the bidders had challenged these claims and submitted fresh bids in the second round.

Essar Steel is one of the 12 companies shortlisted by the Reserve Bank of India for immediate insolvency in last year. These companies have defaulted on loans worth Rs 2.77 lakh crore.