The lenders to Essar Steel have asked two bidders from the first round, ArcelorMittal and Numetal, to clear dues in this regard within seven working days from Wednesday. As far as Numetal is concerned, dues on account of Essar will have to cleared due to Rewant Ruia's indirect and minority exposure in the consortium through Aurora Enterprises. Rewant Ruia is the son of Ravi Ruia, vice-chairman of Essar Group.
Numetal said it had argued before the committee of creditors (CoC) that it was a fully eligible resolution applicant under the Insolvency and Bankruptcy Code (IBC). Neither Numetal nor its shareholders have any loan dues with any creditors in India. Aurora, which had minority shareholder interest with 25 per cent equity in Numetal, neither had a management role or any right to directorship in the company. "Neither Aurora nor its beneficiary has any loan irregularities with Indian lenders and banks. In any event, Numetal's other shareholders have already bought out Aurora's shareholding in the company," the company said. The Resolution Professional (RP) had decided both ArcelorMittal and Numetal were ineligible in the first round under the IBC. Numetal was found ineligible as Ravi Ruia, promoter of Essar Steel, was deemed to be acting in concert. Also, Ravi Ruia had executed bank guarantees.
ArcelorMittal was declared ineligible as it had a 29.05 per cent stake in Uttam Galva Steels and its head, L N Mittal, a personal shareholding in KSS Petron. Both companies were classified as non-performing assets for more than a year.
ArcelorMittal sold its stake in Uttam Galva and L N Mittal in KazStroyService (KSS), ahead of the bid for Essar. However, this was deemed ineligible by the RP because it was a promoter of Uttam Galva in the records of stock exchanges. It has since been declassified as a promoter.
Both bidders had moved the Ahmedabad Bench of the National Company Law Tribunal, which remanded the first rounds of bids back to the RP and CoC for reconsideration, pointing to the payment of the overdue amount as a cure for ineligibility.