ArcelorMittal must clear entire debt of UGSL and KSS to qualify for bidding - NCLT
Times of India reported that ArcelorMittal will have to ensure that the outstanding debt of Uttam Galva and KSS Petron are repaid to be in the race for Essar Steel. A detailed reading of the 89-page order by the National Company Law Tribunal (NCLT) reveals that the ArcelorMittal Group was in control of both Uttam Galva and KSS Petron, which were non-performing assets (NPAs), when the resolution process began. Uttam Galva has outstanding loans of INR 5,654 crore, while KSS Petron has INR 1,340 crore. (ie total of INR 6994 crores)
The tribunal observed that ArcelorMittal has been a promoter of Uttam Galva since 2009 and the company was an NPA in the books of Canara Bank and PNB as of March 2016. Also, on the date of commencement of corporate insolvency resolution process, August 2, 2017, ArcelorMittal was connected to both the defaulting companies. The order said “In order to become eligible, overdue amounts to lenders, in both the cases of KSS Petron and Uttam Galva Steels, should be paid by ArcelorMittal before being eligible to bid as provided in Section 29A itself.”
From the order, it can be discerned that the NCLT is of the opinion that even when bids are put in by promoters who are in default, they should have an opportunity to participate provided they pay back the entire outstanding debt.
Source : Times of India