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Numetal Mauritius, backed by Russia’s VTB Bank, moved the National Company Law Appellate Tribunal (NCLAT) on Thursday claiming that rival ArcelorMittal should not be permitted 30 days to “cure its deficiency” in order to be eligible to bid for Essar Steel.
The case will come up for hearing on Friday.
Numetal cries foul
Numetal pointed out that insolvency rules introduced in November 2017 bar promoters with loan defaults from bidding for stressed assets. ArcelorMittal, which had a stake in the debt-laden Uttam Galva, had placed a bid for Essar Steel this February.
Numetal said the Ahmedabad bench of the National Company Law Tribunal (NCLT) had disqualified Arcelor Mittal India Ltd from bidding for Essar Steel on the grounds that it was a promoter company of firms that had defaulted on payment of bank loans.
The NCLT had, however, “erred” in permitting ArcelorMittal India Ltd “to cure the ineligibility by making payment of the overdue amounts of Uttam Galva and KSS Petron” within 30 days, it said.
“Instead of repaying the defaulted amount, ArcelorMittal sold its shares in Uttam Galva to make itself eligible. Why give 30 days now after the CoC already rejected its bid?” asked a legal source close to Numetal.
Interestingly, Uttam Galva has offered to pay its dues before the NCLT, but its case will come up for hearing only on June 6. The company owes ₹5,600 crore to a consortium of banks led by SBI.
The delay in hearing Uttam Galva’s case could complicate things further for ArcelorMittal.
A source close to ArcelorMittal said Numetal seemed to be going to great lengths to prevent it from acquiring Essar Steel.
Media reports suggest ArcelorMittal has made a superior offer for Essar and the company has always maintained its eligibility to buy the Indian steelmaker, the source said. It is disappointing for Essar’s stakeholders that there are attempts to delay a swift resolution, he added.
CoC to meet tomorrow
The Committee of Creditors (CoC), which was to meet on Friday to take a call on the bids placed by ArcelorMittal and Numetal, has deferred its meeting to Saturday due to a delay in getting legal opinion on the matter.
The lenders are veering towards calling for fresh bids after rejecting the bids placed by both companies.
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