Numetal, Arcelor seek to cancel each other’s bid for Essar Steel

EACH COMPANY HAS CHALLENGED THE OTHER’S LEGITIMACY TO PARTICIPATE IN THE SECOND ROUND OF BIDDING ON APRIL 2

AHMEDABAD: The battle for India’s biggest asset under the new bankruptcy code intensified, with Numetal Mauritius and ArcelorMittal, two of the bidders for Essar Steel Ltd, seeking each other’s disqualification before the Ahmedabad bench of National Company Law Tribunal (NCLT).

Each company, while challenging its disqualification in the first round of bidding by the interim resolution professional (IRP) appointed by the committee of creditors (COC) of Essar Steel, has challenged the other’s legitimacy to participate in the second round of bidding on April 2.

Section 29 (A) of the Insolvency and Bankruptcy Code bars defaulting promoters from participating in the corporate insolvency process and the IRP had last month disqualified bids by Arcelormittal India and Numetal Mauritius for Essar Steel.

The NCLT bench was on Wednesday hearing multiple petitions and counter affidavits filed by Numetal and Arcelormittal. Both have challenged their disqualifications in round one by the IRP.

Senior counsel Mukul Rohatgi, who appeared on behalf of Numetal, told the tribunal that though the interim resolution professional had disqualified Arcelormittal from round one of bidding, there were stronger grounds to disqualify them from further participating in the bidding process.

He said according to section 29 (A) of the Insolvency and Bankruptcy Code, Arcelormittal can only participate in the bidding for Essar Steel after the promoters have repaid debt in companies like Uttam Galva Steel Ltd, where insolvency proceedings have been initiated.

Uttam Galva has a debt of about ₹6,000 crore. While Arcelormittal has sold its stake in Uttam Galva, it has not repaid debt. “They (Arcelormittal) did not repay debt when they bid for round one and they have not cleared it even in round two of bidding. As per the bankruptcy code, if a bidder is a promoter/ stakeholder/director of an NPA company, his bid will stand disqualified unless the bidder clears the debt,” Rohatgi argued.