ArcelorMittal moves NCLT to challenge decision rejecting its Essar Steel bid
Days after the SBI-led consortium of banks rejected both the bids for Essar Steel on technical grounds, Lakshmi Mittal-led ArcelorMittal has challenged the committee of creditors' decision at the Ahmedabad bench of the NCLT, the company said in a statement on Monday.
- Mar 26, 2018,
- Updated Mar 26, 2018 6:12 PM IST
Days after the SBI-led consortium of banks rejected both the bids for Essar Steel on technical grounds, Lakshmi Mittal-led ArcelorMittal has challenged the committee of creditors' decision at the Ahmedabad bench of the NCLT, the company said in a statement on Monday.
Last week, the committee of creditors' had rejected the bids by Numetal and ArcelorMittal for Essar Steel as they were found to be ineligible under the provisions of the amended Insolvency and Bankruptcy Code (IBC).
ArcelorMittal and Russian bank VTB Capital had earlier challenged the validity of each other's bids on the basis of their own interpretation of the newly introduced insolvency and bankruptcy law.
To remind you, VTB is the largest shareholder in NuMetal Ltd. The consortium also includes Russian engineering firm Tyazhpromexport (TPE), Indo International Trading and Aurora Enterprises, owned by a trust controlled by Rewant Ruia, from the estranged promoter family of Essar Steel. Rewant is the son of Ravi Ruia, vice-chairman of Essar Group.
The validity of ArcelorMittal's bid was also questioned as they held a stake in the steel manufacturer Uttam Galva, another loan-defaulter facing insolvency proceedings. The Mittals, who were co-promoters in the company, shed their stake at a discount to become eligible for the Essar bid.
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 from the beginning questioned by the insolvency resolution professional (IRP) and others 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," ArcelorMittal said in a statement. "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," the company added.
It can be noted that ArcelorMittal had a joint venture with Uttan Galwa, while Numetal is 25 per cent owned by Essar Steel's original promoter Ravai Ruia's son Rewant Ruia through a Mauritius based investment vehicle 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 it's February 12th bid was strong and competitive and that it was fully eligible and therefore should 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-bankers consortium has allowed rebid 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.
with PTI inputs
Days after the SBI-led consortium of banks rejected both the bids for Essar Steel on technical grounds, Lakshmi Mittal-led ArcelorMittal has challenged the committee of creditors' decision at the Ahmedabad bench of the NCLT, the company said in a statement on Monday.
Last week, the committee of creditors' had rejected the bids by Numetal and ArcelorMittal for Essar Steel as they were found to be ineligible under the provisions of the amended Insolvency and Bankruptcy Code (IBC).
ArcelorMittal and Russian bank VTB Capital had earlier challenged the validity of each other's bids on the basis of their own interpretation of the newly introduced insolvency and bankruptcy law.
To remind you, VTB is the largest shareholder in NuMetal Ltd. The consortium also includes Russian engineering firm Tyazhpromexport (TPE), Indo International Trading and Aurora Enterprises, owned by a trust controlled by Rewant Ruia, from the estranged promoter family of Essar Steel. Rewant is the son of Ravi Ruia, vice-chairman of Essar Group.
The validity of ArcelorMittal's bid was also questioned as they held a stake in the steel manufacturer Uttam Galva, another loan-defaulter facing insolvency proceedings. The Mittals, who were co-promoters in the company, shed their stake at a discount to become eligible for the Essar bid.
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 from the beginning questioned by the insolvency resolution professional (IRP) and others 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," ArcelorMittal said in a statement. "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," the company added.
It can be noted that ArcelorMittal had a joint venture with Uttan Galwa, while Numetal is 25 per cent owned by Essar Steel's original promoter Ravai Ruia's son Rewant Ruia through a Mauritius based investment vehicle 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 it's February 12th bid was strong and competitive and that it was fully eligible and therefore should 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-bankers consortium has allowed rebid 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.
with PTI inputs