Lenders to bankrupt Essar Steel on Tuesday decided they would only consider resolution applications of Numetal and Arcelor Mittal for the asset if both parties repaid bank debts owed by Indian persons and entities connected to them within a week, said bankers with knowledge of the matter.
In Numetal’s case, this relates to Aurora trust of Rewant Ruia that’s part of the VTB Bank-led consortium.
He’s son of Ravi Ruia and a member of the family that promoted Essar. Arcelor Mittal, led by billionaire LN Mittal, is linked to defaulters KSS Petron and Uttam Galva.
Section 29(A) of the Insolvency and Bankruptcy Code (IBC) bars defaulters from participating in resolution of bankrupt companies.
“Lenders have passed a resolution that both the parties will have to regularise their accounts to be eligible,” said one of the two bankers.
“Just dropping the names of applicants may not be sufficient.” Numetal had said that its application was IBC compliant but that it was open to dropping Rewant Ruia’s Aurora Trust if needed. ArcelorMittal also said it was IBC compliant.
While the committee of creditors didn’t specify the amount, for Numetal it could be more than Rs 40,000 crore and for ArcelorMittal it could be Rs 7,000 crore, said the bankers.
Essar Steel faces claims of Rs 49,000 crore from lenders. Resolution professional Satish Gupta, who is backed by Alvarez and Marsal, had rejected both the offers stating that they do not comply with Section 29(A).
The National Company Law Tribunal (NCLT), had however ordered the resolution professional to give both applicants time to “cure the disability” while adding that the lenders should decide on the eligibility of the bidders. Numetal and ArcelorMittal did not respond to ET’s queries.