Russian firm's NuMetal moves NCLAT against ArcelorMittal's Essar Steel buy
New Delhi: Russia's VTB Capital-backed NuMetal Ltd has moved the National Company Law Appellate Tribunal (NCLAT) against an order allowing rival ArcelorMittal to clear bank dues of associate companies so that it can become eligible for acquisition of Essar Steel.
The NCLAT here is likely to hear the petition on Friday, a day when a panel of lenders to Essar Steel is also slated to meet to decide if fresh bids are to be called.
In the petition, NuMetal said the Ahmedabad-bench of National Company Law Tribunal had disqualified Arcelor Mittal India Ltd from bidding to acquire Essar Steel on 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. Allowing ArcelorMittal to clear dues after the government frame legislation, barring promoters who had defaulted on bank loans from bidding for companies that were being auctioned to recover unpaid loans, was not in accordance with the law, it contends.
NuMetal sought setting aside and quashing of the NCLT order that directed the resolution professional (RP) conducting the auction and the committee of creditors of Essar Steel India Ltd to "reconsider the resolution plan submitted by Arcelor Mittal India Pvt Ltd and afford Arcelor Mittal India Ltd an opportunity to make payment of the over dues amount of Uttam Galva Steels Ltd and KSS Petron Pvt Ltd after the submission of the resolution plan for Essar Steel and cure the ineligibility".
Essar Steel had a debt of Rs 49,000 crore and was referred to NCLT in June last year.
A committee of Essar Steel creditors had earlier this week failed to reach a decision if the first round of bids put in by ArcelorMittal and NuMetal should be considered or fresh bids sought.
Last week, the Ahmedabad bench of the NCLT had asked the lenders to reconsider the first bids submitted by Numetal and ArcelorMittal on February 12. It rejected a second round of bids submitted as well as mining baron Anil Agarwal's Vedanta on April 2.
It had also asked the RP and the lenders to give 30 days' time to these bidders to clear their defaulted accounts.
ArcelorMittal's eligibility was questioned because it had held a stake in Uttam Galva Steels Ltd, which is classified as a delinquent borrower. NuMetal was also considered ineligible because its backers include a company controlled by the son of a billionaire Essar Steel founder.
Aurora Enterprises has since been bought out of the bidding group by JSW Steel Ltd while ArcelorMittal has got its name removed as a promoter of Uttam Galva after selling its stake in the firm.
Luxembourg-based ArcelorMittal is partnering with Nippon Steel & Sumitomo Metal Corp, Japan's top mill, to bid for Essar Steel.