In what can only be perceived as a blow for ArcelorMittal in its quest for acquiring Essar Steel, the National Company Law Appellate Tribunal (NCLAT) recently ruled Numetal’s second round bid as valid. Further, the NCLAT ruled that ArcelorMittal has to clear dues in order to be eligible.
According to the ruling, dues to the tune of Rs 7,000 crore will have to be paid by September 11. “It’s a tricky situation for ArcelorMittal,” said Suharsh Sinha, Consultant at law firm AZB & Partners. The world’s largest steelmaker will have to pay Rs 7,000 crore and could still lose the auction.
Prior to the hearing however, ArcelorMittal had parked Rs 7,000 crore in an escrow account to “show intent” to clear the eligibility hurdle if the need comes. “We note today’s NCLAT judgement and await the full order, which we will review before determining our next steps,” the company said.
Both ArcelorMittal, as well as Numetal are in violation of section 29A of the Insolvency and Bankruptcy Code.
Section 29A bars promoters of defaulting companies – and those connected – from bidding for stressed assets. However, in the case of ArcelorMittal, it has stake in Uttam Galva Steel and KSS Petron – both defaulters, while Numetal has on its board, Rewant Ruia, son of Essar co-founder Ravi Ruia.