New Delhi: Numetal Ltd on Thursday asked the National Company Law Appellate Tribunal (NCLAT) to direct Essar Steel Ltd’s bankruptcy resolution professional to open its Rs37,000 crore bid made in the second round of auction for the debt-ridden steel maker.
Mukul Rohatgi, appearing for Numetal, informed the appellate tribunal that its second offer was “much higher” (than its first bid) and sought maximization of asset value.
“Let the second bid be open..let there be competition”, Rohtagi said.
Apart from Numetal and ArcelorMittal India Pvt. Ltd, Vedanta Ltd also participated in the second round of bidding, the court was informed.
The appellate tribunal allowed the National Company Law Tribunal (NCLT) Ahmedabad bench to extend the corporate insolvency resolution for Essar Steel, in case of pendency of appeal.
The resolution period deadline for Essar Steel is 28 May.
Abhishek Manu Singhvi, appearing for ArcelorMittal India, said the second round of bidding was “infructuous” as the company had already cleared the Rs7,000 crore debt for related companies Uttam Galva Steels Ltd and KSS Petron Pvt. Ltd, thus curing their disqualification from the first round of bidding.
An NCLAT bench headed by Justice S.J. Mukhopadhyay was hearing a batch of cross-appeals concerning disqualified resolution plans by ArcelorMittal and Numetal for Essar Steel.
On 19 April, the NCLT Ahmedabad bench had set aside the first round of bidding for Essar Steel, on the ground that the committee of creditors and the insolvency resolution professional (IRP) did not follow the procedure prescribed under the Insolvency and Bankruptcy Code (IBC).
The tribunal, however, allowed the two final resolution applicants—ArcelorMittal and Numetal—to cure their ineligibility under Section 29A.
While ArcelorMittal was disqualified for its relation to debt ridden Uttam Galva and KSS Petron, Mauritius-based Numetal, was disqualified for being indirectly held by Essar promoters, the Ruia family.
At the previous hearing before the appellate tribunal, ArcelorMittal had stated that its disqualification under Section 29A of the IBC was bad in law.
Numetal—backed by Russia’s VTB Capital—had not only challenged its own disqualification but also disputed the permission granted to rival ArcelorMittal to clear bank dues of associate companies to cure its ineligibility.
Following NCLT’s direction, ArcelorMittal has reportedly deposited Rs7,000 crore in an escrow account with the State Bank of India to settle the dues of Uttam Galva Steels and KSS Petron on the condition that it is declared the successful resolution applicant for Essar Steel.
After the initiation of a corporate insolvency resolution process in August last year at NCLT Ahmedabad, Essar Steel witnessed applications from four entities, including Tata Steel Ltd and Vedanta Resources.
ArcelorMittal and Numetal emerged as the final bidders in February this year.
NCLAT will hear the matter next on 22 May.