A worker dressed in heat protective clothing passes red hot metal in a furnace. (Photographer: Oliver Bunic/Bloomberg)

Essar Steel Resolution Professional Seeks More Time From Lenders

Satish Kumar Gupta, the resolution professional appointed in Essar Steel Ltd., has sought more time from lenders to complete due diligence on the two resolution plans, two bankers in the know told BloombergQuint requesting anonymity.

The committee of creditors was to meet today to discuss the eligibility of the bids submitted by VTB Bank-promoted Numetal and a joint bid by ArcelorMittal and Nippon Steel & Sumitomo Metal Corporation. The bids, submitted on Feb. 12, are being examined by Gupta and his lawyers.

The resolution professional sought time March 7 to submit a report to the committee, the bankers quoted above said. Gupta didn’t respond to calls or messages from BloombergQuint.

Questions were raised about the eligibility of both bidders as an amendment to the Insolvency and Bankruptcy Code made by the government does not allow promoters of stressed companies and related parties to submit a resolution plan. Rewant Ruia, son of Essar Group co-founder Ravi Ruia, is part of the Numetal bid. Similarly, in case of ArcelorMittal India, the company had held equity stake in Uttam Galva Steels Ltd., another company which is facing insolvency proceedings.

In an interview with The Economic Times, Makram Abboud, vice chairman, international, at VTB Capital, said Numetal was willing to part ways with Rewant Ruia if that would ensure eligibility of its bid. In a statement on Monday, ArcelorMittal reiterated that it was eligible to submit a resolution plan for Essar Steel.

Lenders also confirmed that the number of companies associated with both bidders run into the hundreds, which had made the process of due diligence more complicated. The Insolvency and Bankruptcy Board of India requires the resolution professional to assess all connected parties before approving any plan for consideration by lenders.

Essar Steel is one of the largest cases being resolved under the Insolvency and Bankruptcy Code. The company, promoted by the Ruia family, owes more than Rs 52,000 crore to its creditors, according to information on its website.

Lenders led by State Bank of India had moved against Essar Steel after the Reserve Bank of India created a list of 12 large corporate accounts for immediate insolvency proceedings in June last year.