Essar Steel: Supreme Court To Hear ArcelorMittal’s Plea Against NCLAT Decision On Wednesday
The Supreme Court will hear ArcelorMittal’s plea on its eligibility to bid for Essar Steel Ltd. on Wednesday. While the apex court heard the petition on Tuesday, ArcelorMittal said it was eligible for bidding and it shouldn’t be forced to pay the Rs 7,000 crore dues of Uttam Galva Steels Ltd. and KSS Petron Ltd.
On Sept. 7, the National Company Law Appellate Tribunal had noted that ArcelorMittal can be eligible for bidding only if it clears dues worth Rs 7,000 crore in Uttam Galva Steels and KSS Petron Pvt. Ltd. by Sept. 11. ArcelorMittal challenged the decision as the NCLAT allowed for Numetal Mauritius, the other bidder in the process, to be eligible after changing its shareholding structure.
ArcelorMittal is classified as a promoter for Uttam Galva and it has a stake in KSS Petron’s parent company. So, the steelmaker will have to repay dues in both companies to cure the Section 29A issues, the appellate tribunal said. But since Numetal had severed ties with the Ruia family, it was eligible to bid for the company, the NCLAT clarified.
Both bidders were termed ineligible by the resolution professional in the first round of bidding under Section 29A of the Insolvency and Bankruptcy Code. The section doesn’t allow promoters of defaulting firms to participate in a bidding process. While ArcelorMittal had a stake in Uttam Galva and KSS Petron, the presence of a Ruia family member as a direct beneficiary of a trusteeship that held 25 percent stake in Numetal Mauritius was signaled out.
The Lakshmi Mittal-owned company, however, said it had sold shareholding in Uttam Galva before submitting a revised bid on March 29. This should have made the company eligible, it said.
Before filing the Supreme Court petition late Monday, ArcelorMittal sent a letter to the lenders of Essar Steel offering them Rs 42,000 crore to buy the company. ArcelorMittal, in its letter, had said it’s also willing to pay off dues in Uttam Galva and KSS Petron even though it believes that it isn’t liable. ArcelorMittal’s bid was higher than Rs 37,000 crore that Numetal had offered for the debt-ridden company.
In April, the Ahmedabad-bench of the National Company Law Tribunal asked lenders to give the bidders time to cure their Section 29A problems and become eligible to bid for Essar Steel. Numetal’s other shareholders bought the Ruia stake and brought in JSW Steel to manage the steel asset if they won. ArcelorMittal parked Rs 7,000 crore with State Bank of India, saying the bankers could take the money if they chose its offer as the winning bid.