NCLAT puts on hold Essar Steel resolution process

New Delhi, May 22: The National Company Law Appellate Tribunal Tuesday put on hold the resolution process of Essar Steel. The tribunal has also asked the resolution professional overseeing the auction, and the Committee of Creditors, to refrain from taking any decisions.
The tribunal heard submissions from Numetal and ArcelorMittal, who are in the race for Essar Steel. While Mukul Rohatgi appeared for Numetal, Harish Salve represented ArcelorMittal.
Sticking to its stance, ArcelorMittal argued that bids in the first round should be considered. The world’s largest steelmaker had transferred Rs 7,000 crore into an escrow account of State Bank of India to show its intent in clearing the eligibility hurdle.
The resolution professional had initially termed first round bids by ArcelorMittal and Numetal ineligible under Clause 29A of the Insolvency and Bankruptcy Code.
The clause prevents promoters of defaulting companies from bidding for stressed assets. ArcelorMittal’s investments in Uttam Galva Steels and KSS Petron were said to be a hurdle, as the two companies had defaulted on loan repayments.
The lenders had asked ArcelorMittal to clear the dues to make its bid in the first round eligible.
Similarly, Numetal was asked to clear the dues of Essar Steel, as its minority shareholder Rewant Ruia was a ‘connected person,’ given that his father Ravi Ruia is co-founder of Essar Steel.
But Numetal’s lawyer, Rohatgi, argued that the second round bids should be opened as the company had bid Rs 37,000 crore for Essar Steel. Rewant Ruia is not part of the Numetal consortium in the second round.