NCLAT Puts Essar Steel’s Insolvency Process On Hold
The National Company Law Appellate Tribunal today passed an interim order, putting the insolvency resolution process of Essar Steel Ltd. on hold.
The bench headed by Justice SJ Mukhopadhyay admitted pleas filed by the VTB-led Numetal and ArcelorMittal India and said no order to be passed including liquidation of the debt-laden steelmaker, even if the insolvency deadline expires. This stay on decision making applies to the resolution professional, committee of creditors and the National Company Law Tribunal.
The NCLAT will start hearing the matter from July 23.
The petition by Numetal challenges the Ahmedabad NCLT’s order that directed ArcelorMittal clear the dues of its associate companies to become eligible to bid for Essar Steel. Arcelor Mittal, in its plea, has challenged the resolution professional’s move to disqualify it from the first round of bidding.
Both bidders had earlier been deemed ineligible by the committee of creditors owing to violations under Section 29(A) of the Insolvency and Bankruptcy Code.
In ArcelorMittal’s case, the NCLT had found that the company was liable—as a promoter of non-performing assets KSS Petron and Uttam Galva Steels Ltd.—to repay dues to the lenders of both companies. In Numetal’s case, Essar Group co-Founder Ravi Ruia, had issued guarantees to banks in exchange for loans availed by other group companies, which needs to be cleared, for it to become eligible. Ruia’s son was a beneficiary of Aurora Trust which held 25 percent equity in Numetal Mauritius when the first bid was submitted.
The lenders had later issued directions to both companies, enabling them to clear dues and become eligible to bid for the asset under the insolvency process.
In response to the NCLAT’s order, ArcelorMittal said in a statement that its bid was the highest and that even though it believed the bid to be eligible it demonstrated its commitment to India by confirming intent to settle dues of KSS Petron and Uttam Galva. “We believe we have appropriately addressed the questions the Committee of Creditors had raised and that there should now be no doubt that we are fully eligible,” the world’s largest steel manufacturer said.
“We hope that the subsequent court hearing now scheduled for July will provide a fair and satisfactory conclusion to this process...”