Numetal, a joint venture between Russia’s VTB Bank and Rewant Ruia’s trust, has made a bid for Essar Steel under the Insolvency and Bankruptcy Code (IBC), as has Lakshmi Mittal’s ArcelorMittal. Essar Steel owes lenders close to Rs 45,000 crore. Both NuMetal and ArcelorMittal were found to be ineligible to bid under Section 29A of the Insolvency and Bankruptcy Code. The Committee of Creditors (CoC) for Essar Steel decided last week it would only consider applications from bidders who had submitted expressions of interest in the first round. According to Bloomberg, the 253-km Odisha Slurry pipeline between Dabuna and Paradeep, operated by Essar Steel, was acquired by OSPIL in May 2015. While staying the sale of the stake in OSPIL in February, the Delhi High Court had observed:“Reliance is placed on clause 6.2 of the loan agreement which contains a negative covenant which provides that the defendant shall not effect any change in its capital structure or permit any transfer of its controlling interest without prior written approval of the lender.

The court had added that lenders have made out a prima-facie case. “The defendant is restrained from changing its capital structure or permitting any transfer of controlling interest in favour of Numetal Mauritius or any other third party in contravention of Clause 6.2 (ix) of the loan agreement till the next date of hearing,” the order had said. Meanwhile, lenders and the resolution professional (RP) designated for Essar Steel are racing against time to ink a turnaround plan before April 29, the deadline for its 270-day insolvency process completion. They have sought bids to be submitted by early next week so that they can try and stitch together a final plan and prevent the company from going into forced liquidation.

What might complicate and delay the process, though, is that two key bidders, ArcelorMittal and Numetal, have both moved the National Company Law Tribunal (NCLT) against their disqualification in the first round. While the two processes are likely to continue simultaneously, a move in favour of the bidders could complicate matters regarding bids in the second round.