The Ahmedabad Bench of the National Company Law Tribunal (NCLT) on Tuesday adjourned hearing of ArcelorMittal and Numetal's petitions challenging ineligibility of their bids for Essar Steel till April 4.
While Numetal had moved the NCLT on March 20, ArcelorMittal had done so on Monday, March 26 challenging the decision to declare their bids ineligible. Adjourning the hearing till next Wednesday, April 4, Manorama Kumari, the adjudicating authority at NCLT's Ahmedabad bench observed that the second round of bidding for Essar Steel would continue to be held on April 2.
The Committee of Creditors in Essar Steel's case had called for a second round of bidding on April 2, after finding both Numetal and ArcelorMittal's bids ineligible.
Represented by Darius Khambatta as the legal counsel, CoC told the bench that both ArcelorMittal and Numetal can bid afresh on April 2, along with other parties that had had submitted expressions of interest for Essar Steel in the first round.
"Nothing stops them from rebidding on April 2," Khambatta told the bench on Tuesday. Challenging the disqualification from first round of bidding, Numetal's legal counsel Mukul Rohatgi had prayed for deferment of the second round of bidding to a later date which was not admitted by the bench.
On the other hand, represented by Abhishek Manu Singhvi as the legal counsel, ArcelorMittal too had objected to such deferment of the bidding post April 2.
In his argument, the CoC's counsel maintained that with the 270 days insolvency resolution timeline set to end on April 29, the bidding process was required to be completed at the earliest. Khambatta argued that the disqualified bidders had 10 days since their disqualification on March 23 to take corrective measures before bidding again the second round.
In an official communique, the LN Mittal-led company stated, "ArcelorMittal intends to rebid though we continue to strongly believe that our original offer is eligible. The outcome of the rebid remains subject to the outcome of the ongoing case at the NCLT. We agree wholeheartedly with comments made in the media that the spirit of 29A must be upheld. One should review statements made by the finance minister when the article was introduced; it makes clear that its purpose is to prevent previous defaulters from regaining control of the assets they have bankrupted at a haircut.
Clearly that has no relevance to ArcelorMittal's bid for Essar Steel."
On the other hand, Numetal stated that apart from challenging its ineligibility, the company also prayed that the second round of bidding for Essar Steel due on April 2 should be deferred till the matter is heard on April 4 by the NCLT's Ahmedabad bench.
"After hearing the arguments of the parties on the bids being called by 2nd April, the NCLT was pleased to post the matter for 4th April for hearing on merits with the direction that all the parties can file and serve their replies on all the application by April 2. The bids will be required to be submitted as per the decision of the CoC on April 2. However the CoC is no going to meet before April 5 and the NCLT will hear the matter before that on the April 4 so that the interest of the parties including is not affected in any way and the second round of bids will be evaluated subject to the outcome of the applications filed by Numetal and Arcelor Mittal," the company further stated.
Last week, the committee of creditors rejected bids for Essar Steel by Numetal, a subsidiary of Russian VTB Bank, and ArcelorMittal after both failed the eligibility test.
While ArcelorMittal's bid was disqualified on grounds of the company still being a promoter of the defaulter Uttam Galva Steels on the stock exchanges, Numetal's bid was rejected because 25 per cent of its shares were owned by an offshore trust, with Rewant Ruia, a Ruia family member, as a beneficiary. The Ruias are the promoters of Essar Steel.
The lenders’ committee also decided to keep new bidders such as JSW Steel at bay and sought a second round of bids only from those companies that had submitted their expressions of interest (EoIs) before the first round.
Of the seven companies that submitted EoIs, only Numetal and ArcelorMittal had bid in the first round.
In an earlier statement, ArcelorMittal had said that it believed that its "strong and competitive" bid for Essar Steel, submitted on February 12, was fully eligible and therefore should have been placed before the Committee of Creditors by the resolution professional.
"However we received formal notification on March 23 that our bid was deemed ineligible due to the technicality of still being a promoter of Uttam Galva Steels on the stock exchange, even though we had sold our shareholding before submitting the offer. Furthermore, the stock exchanges have confirmed that ArcelorMittal was declassified as a promoter of Uttam Galva Steels. We have therefore today proposed a legal challenge to the decision of the resolution professional in the court in Ahmedabad. This is also critical in order to ensure we protect our rights in the process, given the legal challenge by Numetal against the decision," the statement from ArcelorMittal read.
While Numetal had moved the NCLT on March 20, ArcelorMittal had done so on Monday, March 26 challenging the decision to declare their bids ineligible. Adjourning the hearing till next Wednesday, April 4, Manorama Kumari, the adjudicating authority at NCLT's Ahmedabad bench observed that the second round of bidding for Essar Steel would continue to be held on April 2.
The Committee of Creditors in Essar Steel's case had called for a second round of bidding on April 2, after finding both Numetal and ArcelorMittal's bids ineligible.
Represented by Darius Khambatta as the legal counsel, CoC told the bench that both ArcelorMittal and Numetal can bid afresh on April 2, along with other parties that had had submitted expressions of interest for Essar Steel in the first round.
"Nothing stops them from rebidding on April 2," Khambatta told the bench on Tuesday. Challenging the disqualification from first round of bidding, Numetal's legal counsel Mukul Rohatgi had prayed for deferment of the second round of bidding to a later date which was not admitted by the bench.
On the other hand, represented by Abhishek Manu Singhvi as the legal counsel, ArcelorMittal too had objected to such deferment of the bidding post April 2.
In his argument, the CoC's counsel maintained that with the 270 days insolvency resolution timeline set to end on April 29, the bidding process was required to be completed at the earliest. Khambatta argued that the disqualified bidders had 10 days since their disqualification on March 23 to take corrective measures before bidding again the second round.
In an official communique, the LN Mittal-led company stated, "ArcelorMittal intends to rebid though we continue to strongly believe that our original offer is eligible. The outcome of the rebid remains subject to the outcome of the ongoing case at the NCLT. We agree wholeheartedly with comments made in the media that the spirit of 29A must be upheld. One should review statements made by the finance minister when the article was introduced; it makes clear that its purpose is to prevent previous defaulters from regaining control of the assets they have bankrupted at a haircut.
Clearly that has no relevance to ArcelorMittal's bid for Essar Steel."
On the other hand, Numetal stated that apart from challenging its ineligibility, the company also prayed that the second round of bidding for Essar Steel due on April 2 should be deferred till the matter is heard on April 4 by the NCLT's Ahmedabad bench.
"After hearing the arguments of the parties on the bids being called by 2nd April, the NCLT was pleased to post the matter for 4th April for hearing on merits with the direction that all the parties can file and serve their replies on all the application by April 2. The bids will be required to be submitted as per the decision of the CoC on April 2. However the CoC is no going to meet before April 5 and the NCLT will hear the matter before that on the April 4 so that the interest of the parties including is not affected in any way and the second round of bids will be evaluated subject to the outcome of the applications filed by Numetal and Arcelor Mittal," the company further stated.
Last week, the committee of creditors rejected bids for Essar Steel by Numetal, a subsidiary of Russian VTB Bank, and ArcelorMittal after both failed the eligibility test.
While ArcelorMittal's bid was disqualified on grounds of the company still being a promoter of the defaulter Uttam Galva Steels on the stock exchanges, Numetal's bid was rejected because 25 per cent of its shares were owned by an offshore trust, with Rewant Ruia, a Ruia family member, as a beneficiary. The Ruias are the promoters of Essar Steel.
The lenders’ committee also decided to keep new bidders such as JSW Steel at bay and sought a second round of bids only from those companies that had submitted their expressions of interest (EoIs) before the first round.
Of the seven companies that submitted EoIs, only Numetal and ArcelorMittal had bid in the first round.
In an earlier statement, ArcelorMittal had said that it believed that its "strong and competitive" bid for Essar Steel, submitted on February 12, was fully eligible and therefore should have been placed before the Committee of Creditors by the resolution professional.
"However we received formal notification on March 23 that our bid was deemed ineligible due to the technicality of still being a promoter of Uttam Galva Steels on the stock exchange, even though we had sold our shareholding before submitting the offer. Furthermore, the stock exchanges have confirmed that ArcelorMittal was declassified as a promoter of Uttam Galva Steels. We have therefore today proposed a legal challenge to the decision of the resolution professional in the court in Ahmedabad. This is also critical in order to ensure we protect our rights in the process, given the legal challenge by Numetal against the decision," the statement from ArcelorMittal read.
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