Essar Steel Lenders Find More Reasons To Disqualify ArcelorMittal, Numetal Bids
Lenders to Essar Steel Ltd. have found further issues with the bids submitted by Numetal Mauritius and ArcelorMittal India, which may lead to them to declare these bids ineligible once again.
These issues surfaced when the committee of creditors today assessed a forensic audit report prepared by corporate investigations firm Kroll, two bankers who attended the eight-hour long meeting said. Both bankers spoke on the condition of anonymity.
The issues relate to Section 29(A) of the Insolvency and Bankruptcy Code which prohibits certain promoters from bidding for companies under the insolvency process. The bankers quoted above said they include certain regulatory orders against the two bidders and criminal cases pending against them.
ArcelorMittal and Numetal did not respond to BloombergQuint's queries. Tarun Bhatia, managing director at Kroll India declined to comment on the contents of the forensic audit citing a non-disclosure agreement.
The bids submitted by both Numetal and ArcelorMittal were considered ineligible by the lenders under Section 29(A) since they had links to companies which had defaulted on their loans and had been termed as non-performing assets. The National Company Law Tribunal, which was hearing petitions challenging the CoC's decision, ruled last week that under procedure laid down in the IBC, promoters disqualified for the NPA clause in this section must get a 30-day rectification period during which they can repay their dues and become eligible again.
Bankers met today to reconsider these bids after the NCLT directed them to do. The tribunal found lapses in the way the bids were declared ineligible as lenders had not opened them, and instead relied on the recommendation of the resolution professional.
The creditors who opened both bids for an assessment found that ArcelorMittal's bid was higher than that of Numetal's in the first round of bidding, BloombergQuint reported earlier today.
The CoC will meet again on Thursday and on Friday to discuss whether the Section 29(A) issues found in forensic audit should be considered as grounds to disqualify the bids yet again. The NCLT had suggested that the lenders invite fresh bids from all interested parties if they find the first round of bids ineligible.
Earlier this month, the lenders had invited a second round of bids from companies which had submitted their expressions of interest earlier. ArcelorMittal India and Numetal had submitted fresh bids, while the Vedanta Group had also entered the race. However, in its order, the NCLT said that the second round of bidding appears to be invalid, on the face of it.
In their two-day meeting, creditors will also decide on the future of course of action –whether they would follow the NCLT's direction or challenge it in the appellate tribunal.
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