On 20 Apr’18, the Ahmedabad bench of NCLT (National Company Law Tribunal) had declared the invitation for the company’s second round of bidding as invalid and had asked the lenders and RP (Resolution Professional) of bankrupt Essar Steel to reconsider the first bids submitted by original bidders Arcelor Mittal and Numetal.
Now as per the latest updates, CoC (Committee of Creditors) of Essar Steel has asked Numetal Mauritius and Arcelor Mittal India to clear their dues in order to become eligible to bid for Essar Steel which is undergoing insolvency proceedings.
In case of Arcelor Mittal the company being a promoter of KSS Patron and Uttam Galva Steels is liable to repay dues to the lenders of both the companies. Whereas in case of Numetal, 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. Revant Ruia, son of Mr. Ravi Ruia was a beneficiary of a trust which held 25% equity in Numetal Mauritius when the first bid was submitted.
Both bidders have been given seven days to clear their dues and the bidders will have to get ‘no dues’ certificates from all of their respective lenders and submit in writing that they do not have any pending liabilities to be considered as eligible bidders for Essar Steel.
According to the market reports, after the Ahmedabad bench of NCLT passed its orders to reconsider the bids of original bidders on 20 Apr’18, NCLT had asked the CoC to open their bids and it was found out that Arcelor Mittal’s bid was higher than the Numetal’s one. However, it is still not known whether Numetal will be allowed to revise their bids after clearing its pending dues.
Essar Steel, a flagship company of Ruia’s family, is one of the dozen companies against which RBI (Reserve Bank of India) had initiated bankruptcy proceedings last year in Jun’17. According to data published on company’s website, Essar Steel owes INR 49,212 crores to 34 banks, financial institutions, trusts, and other corporate entities, INR 2,581 crore to the creditors, and INR 18 crores to the employees.
The company has an integrated steel plant with a capacity of 10 MnT in Gujarat. While the company manufactures flat steel products, plates, and pipes that were sold through its own domestic channels, in terms of raw material it also owns an iron ore mine in eastern part of India.
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