Rewant Ruia is the son of Ravi Ruia, vice-chairman of Essar Group.

The Insolvency and Bankruptcy Code (IBC) has barred owners and associates of defaulter companies from bidding for distressed assets when they are sold to raise cash for creditors.

“Though we believe that Rewant is a good addition to our bid; but if that stands between us and winning Essar Steel, other shareholders will buy his stake, and this is already stipulated in our bid that was submitted” said Makram Abboud, vice-chairman of VTB Capital, the largest shareholder in NuMetal.

The consortium also includes Russian engineering firm Tyazhpromexport (TPE), Indo International Trading and Aurora Enterprises Ltd, owned by a trust controlled by Rewant Ruia as its trustee.

“The Ruias are one of our clients and we have a very good relationship with them but we are not married to them and they are not married to us, we all work independently as much as we work together” Abboud said.

“Also, Rewant Ruia does not have a board representation in NuMetal and is only a minority shareholder with no say in the management and was inducted because we wanted a local partner,” he added.

Mint had reported 21 February that NuMetal’s bid for Essar Steel was likely headed for disqualification as the technical evaluation by law firm Cyril Amarchand Mangaldas and advisory firm Grant Thornton, were found to be short of fulfilling the prescribed eligibility criteria under the Insolvency and Bankruptcy Code, which bars promoters of defaulting companies from bidding for distressed assets.

Mint had reported on 12 February that NuMetal and ArcelorMittal were the only firms to have submitted binding financial bids for bankrupt Essar Steel Ltd.

“Our interest in Essar Steel has been long standing and we have been engaged in discussions with all stakeholders before it was referred to NCLT but nothing stuck at that stage” Abboud said.

“It was a different cycle back then but the steel sector is very different now and we were interested in bidding because the market has changed and our appetite has changed too,” Abboud maintained.

Not ruling out the possibility of seeking legal recourse in the event of being disqualified, Abboud said “our bid is within the framework of law we would respond accordingly if our eligibility is questioned”.

There were questions around the validity of ArcelorMittal’s bid as well, which had sold its stake in distressed steel maker Uttam Galva Steels Ltd back to its promoters at a huge discount, possibly as a means to qualify as a bidder for Essar Steel and other distressed assets that are up for sale. Uttam Galva is in the Reserve Bank of India’s second list of corporate defaulters slated to face insolvency proceedings.

Essar Steel owes around Rs45,000 crore to a consortium of 22 creditors led by State Bank of India (SBI), Essar Steel Hazira is the country’s largest single-location flat steel plant. The complex also houses a 30 million tonne per annum, all-weather, deep draft, dry bulk port and a 515 megawatt natural gas-operated power plant.

In August last year the creditors filed bankruptcy proceedings against Essar Steel in NCLT following which an interim resolution professional was appointed to administer the company. Several other potential suitors which include Vedanta Resources and Tata Steel had shown initial interest in the company and had submitted an expression of interest but did not submit binding bids eventually.

While the Committee of Creditors led by SBI is yet to make its decision public the Financial Express citing people aware of the matter reported on February 24 that the creditors are likely to approach the NCLT for approval before the resolution plans submitted by NuMetal and ArcelorMittal are taken up for evaluation.