Essar Steel: ArcelorMittal challenges bankers’ rejection at NCLT
ArcelorMittal said the company had already informed the stock exchanges that it was declassified as a promoter of Uttam Galva, and was therefore challenging the lenders’ rejection of its bid at the Ahmedabad bench of the NCLT.business Updated: Mar 26, 2018 17:38 IST
ArcelorMittal has challenged Essar Steel’s committee of creditors’ decision to reject its bid for the distressed steelmaker on technical grounds at the Ahmedabad bench of the NCLT, the company said in a statement on Monday.
The bankers had met on March 23 in Mumbai and had rejected ArcelorMittal’s bid along with that of Numetal - the only two bidders for the crippled 10-million tonne Essar Steel assets at Hazira in Gujarat - citing technical issues.
These two bids were being questioned by the insolvency resolution professional (IRP) and others from the start, as the promoters of both these firms were defaulters in other firms - the Ruias in Essar Steel and the Mittals in Uttam Galva.
“We have already informed the stock exchanges that ArcelorMittal was declassified as a promoter of Uttam Galva. We have therefore today proposed a legal challenge to the decision of the resolution professional in the court in Ahmedabad.”
“This legal challenge is also critical to ensure that we protect our rights in the process given the legal challenge by Numetal against the decision of the committee of creditors,” ArcelorMittal said in a statement.
ArcelorMittal had a joint venture with Uttan Galwa, while Essar Steel’s original promoter Ravai Ruia’s son Rewant Ruia holds a 25% stake in Numetal through a Mauritius based special investment vehicle (SPV) called Aurora Trusts.
Rejecting both the bids, the SBI-led consortium said under the provisions of Section 29A of the Insolvency and Bankruptcy Code (IBC), both the bids by the Mittal’s and Numetal were ineligible.
The Section 29A debars promoters with direct or indirect links to the defaulted promoter of a bankrupt asset from bidding for the same through the insolvency process.
In the statement, ArcelorMittal said it continues to believe that its February 12th bid was strong and competitive, and that it was fully eligible. It should, therefore, have been placed before the committee of creditors by the IRP.
“However, we received formal notification on March 23 that our bid was ineligible due to the technicality of still being a promoter of Uttam Galva on the stock exchange, even though we had sold our shareholding before submitting our offer,” it said.
The 30-banker strong consortium has allowed rebidding till April 2, while the petition of Numetal, which has already challenged the rejection at the NCLT, will be taken up on March 27.
Under the insolvency resolution process, the case should be settled within a maximum 270 days, which ends on April 29 in the case of Essar Steel.