SC grants one more opportunity to NuMetal, ArcelorMittal to bid for Essar Steel on paying off NPAs

The Supreme Court Thursday granted one more opportunity to steel and mining major ArcelorMittal and Russia's VTB Bank-promoted NuMetal to bid for Essar Steel, provided the two pay off the non-performing assets (NPAs) of their related corporate debtors within two weeks.

A bench of Justices R F Nariman and Indu Malhotra, however, held that ArcelorMittal India Pvt Ltd and NuMetal Ltd were ineligible to file resolution plans for corporate debtor Essar Steel -- which had NPAs or bad debts amounting to Rs 45,000 crore -- as per the criteria laid down in the amended Insolvency and Bankruptcy Code (IBC).

The top court granted one more opportunity to the two bidders keeping in mind the submission of the Committee of Creditors (CoC), led by SBI and Standard Chartered Bank, that liquidation of Essar Steel would not be beneficial as its dues may remain unrealised.

"Acceding to this request (of CoC), in order to do complete justice under Article 142 of the Constitution..., we give one more opportunity to both resolution applicants to pay off the NPAs of their related corporate debtors within a period of two weeks from the date of receipt of this judgment, in accordance with the proviso to Section 29A(c)," said the bench in its 154-page verdict.

"If such payments are made within the aforesaid period, both resolution applicants can resubmit their resolution plans dated April 2, 2018 to the CoC, who are then given a period of 8 weeks from this date, to accept, by the requisite majority, the best amongst the plans submitted, including the resolution plan submitted by Vedanta," it said.

It also said that in the event where no plan is found "worthy of acceptance" by the requisite majority of the CoC, corporate debtor Essar Steel, shall "go into liquidation".

The bench dealt in detail with Section 29A (c) of the IBC which provides as to who are the persons ineligible to bid for a corporate debtor.

It said: "The interpretation of Section 29A(c) now becomes clear. Any person who wishes to submit a resolution plan, if he or it does so acting jointly, or in concert with other persons, which person or other persons happen to either manage or control or be promoters of a corporate debtor, who is classified as a NPA and whose debts have not been paid off for a period of at least one year before commencement of corporate insolvency resolution process, becomes ineligible to submit a resolution plan."
It further said that the provision ensured that "the ineligibility can only be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the NPAs in question before submission of a resolution plan."