The National Company Law Tribunal (NCLT) adjourned the hearing of insolvent firm Uttam Galva Steels (UGSL) till August 13, saying it was waiting for the National Company Law and Appellate Tribunal’s (NCLAT’s) verdict on ArcelorMittal’s eligibility to bid for another stressed corporate, Essar Steel.
The point of contention that has come up at both the NCLAT and NCLT is whether ArcelorMittal can bid for Essar Steel as it holds significant stakes in other stressed companies. ArcelorMittal was an investor in UGSL with a 29.05 per cent stake, but it transferred the shares inter se to the promoter group to make itself eligible for the Essar Steel first round of bidding in February.
ArcelorMittal sold its shares in UGSL to terminate the co-promotion agreement even though the former did not have management control or board representation.
LN Mittal, chairman of ArcelorMittal, held a personal stake of 33 per cent in KSS of Kazakhstan until January. KSS, in turn, held a 33 per cent stake in KSS Petron in India, which is facing bankruptcy proceedings.
ArcelorMittal had emerged alongside Numetal as the only bidders for Essar Steel, and both submitted their offers on February 12 and April 2, but Essar Steels’ resolution professional and creditors rejected the bids on the grounds that they were both ineligible given the conditions laid down in the Insolvency and Bankruptcy Code.