Essar steel CoC supports Numetal eligibility to bid
The committee of creditors (CoC) in charge of reviving the ailing Essar Steel Tuesday told the Supreme Court it sided with Numetal, which it said was now eligible to bid for Essar Steel, but ArcelorMittal was not.
The committee of creditors insists Essar Steel has turned corners. “Essar now has surplus cash,” said Subramanium. He pointed out several loopholes in the Insolvency and Bankruptcy Code and urged the court to take remedial steps. He said that the law did not intend to hand back companies to those who were unwilling to pay back creditors. Courts should allow the CoC to examine who has management and control of the entity which is bidding, so those unwilling to repay debts to public banks can be kept out of the resolution process. Subramanium said stake above 25% should be construed as control, a fact that he said establishes ArcelorMittal as the entity controlling KSS Petron.
The CoC had refused to consider ArcelorMittal’s bid for Essar Steel, prompting it to move the top court. ArcelorMittal has since offered to pay back Rs 7,000 crore of dues of two ailing entities under it — Uttam Galva and KSS Petron — to the banks if its bid for Essar is considered. “We will pay back irrespective,” its lead lawyer senior advocate Harish N Salve told court tuesday.
ArcelorMittal has promised to bring in much needed FDI into the ailing sector. Numetal also claims that it is bringing in expertise. But ArcelorMittal says it would have to pay more than Rs 45,000 crore by way of bank dues, an amount almost on par with its bid.