ArcelorMittal, Numetal to submit revised bids after clearing dues: SC

4 Oct
ArcelorMittal, Numetal to submit revised bids after clearing dues: SC

The apex Court has given both ArcelorMittal and Numetal two weeks to clear their outstanding dues and then submit a revised bid for Essar Steel.

The Supreme Court said that both the parties are ineligible under the Insolvency and Bankruptcy Code and will have to clear their dues first to become eligible. While ArcelorMittal owes Rs 7,000 crore of outstanding dues related to Uttam Galva, where it held promoter stake and KSS Petron, the top court has asked Numetal to clear the dues of related parties.  

66% majority of Committee of Creditors (CoC) will finalise the bid and if the majority doesn't approve any bid, then Essar Steel goes into liquidation, Supreme Court said in its order. 

The Supreme Court had reserved the verdict on September 27 after hearing all the parties in the case.

The Supreme court also said that the ineligible bidders do not wriggle out of the IBC clauses. 

ArcelorMittal had challenged the NCLAT order which held that steel major's second bid for Essar Steel will be eligible if it clears Rs 7,000 crore of dues pending for two of its associated companies - Uttam Galva and KSS Petron. 

Numetal, which is a consortium led by the Russian bank VTB, had challenged the NCLAT's order giving an option to ArcelorMittal to clear the dues even after it had submitted its bid. 

The CoC, in its submissions, had said that the Supreme Court will have to lift the "corporate veil" to know the persons behind these firms and determine their eligibilty according to the provisions of the Insolvency and Bankruptcy Code.

NCLAT in its order declared that Numetal's second round bid for Essar Steel was eligible. But, ArcelorMittal challenged it saying that Numetal is a shell firm in which the Essar promoters are a major shareholder. 

The first round bidding by both the ArcelorMittal and the Numetal was rejected by the Commitee of Creditors (CoC) for being associated with firms which are classified as defaulters, thereby violating Section 29(A) of the IBC. While ArcelorMittal's bid was rejected on the grounds that two firms, Uttam Galva and KSS Pteron, associated with ArcelorMittal were defaulters, Numetal's bid was rejected as Rewant Ruia, son of Essar Steel promoter Ravi Ruia, held 25 per cent stake in the consortium. 

Both ArcelorMittal and Numetal had challenged the CoC decision to reject their first round bids in the NCLT. NCLT, in its order asked the CoC to take a relook at the bids. However, the CoC called for second round of bidding.