Essar Steel insolvency case: Second round bids to be opened today

ArcelorMittal has time till September 11 to pay dues to become eligible
The second round of bids for Essar Steel will be opened in the presence of lenders on Monday, sources close to the development said.

The offers by three bidders — Numetal (minus Aurora Enterprises), ArcelorMittal, and Vedanta — will be opened in line with the September 7 order of the National Company Law Appellate Tribunal (NCLAT). Numetal was joined by JSW as an investor in a step-down subsidiary and ArcelorMittal with Nippon Steel.  

In the second round, Numetal had dropped Aurora Enterprises, of which Rewant Ruia is the ultimate beneficiary, which made its bid eligible. Rewant Ruia is the son of Ravi Ruia, a promoter of Essar. According to the NCLAT order, ArcelorMittal has time till September 11 to clear its dues on account of defaulting firms, Uttam Galva Steels and KSS Petron, to become an eligible bidder for Essar. So, though bids will be opened on Monday, Arcelor will have time till Tuesday to make its second offer eligible.

Lenders would like the bids to be opened before ArcelorMittal moves court if it decides to challenge the NCLAT order, said sources. Also, the appellate tribunal wanted the committee of creditors to take an early decision. The 270-day deadline for Essar ends on October 10.

The NCLAT order said if ArcelorMittal deposited the amount in the accounts of Uttam Galva and KSS Petron before the deadline, the committee of creditors would consider its resolution plan along with other offers. 

Both Uttam Galva and KSS Petron were classified as non-performing assets (NPAs) for more than a year, and Section 29A (c) of the Insolvency and Bankruptcy Code debars the promoters of an NPA for more than a year from submitting a resolution plan unless it paid overdue. 

Numetal, when it appealed in the NCLAT for the second bids, had said it had offered Rs 370 billion as upfront payment in the second offer. ArcelorMittal and Vedanta's second offers are not known. The resolution professional invited a second round of bids when it found ArcelorMittal and Numetal ineligible in the first round. ArcelorMittal was disqualified on technical grounds as it had sold its shares in Uttam Galva prior to the submission of bid but continued to be its promoter in the records of the stock exchanges. Numetal was disqualified on grounds of Rewant's exposure in the consortium. However, both parties challenged their disqualification before the NCLT Ahmedabad Bench.

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