NCLAT Seeks Explanation From IRP For Rejection Of Bids In First Round

- Jul 05, 2018-

Mint reported that the National Company Law Appellate Tribunal (NCLAT) on Monday sought an explanation from the insolvency resolution professional of Essar Steel Ltd for rejecting the first round of bids by Numetal Ltd and ArcelorMittal India Ltd. During the hearing of the cross petitions filed by the two disqualified bidders, a two-judge NCLAT bench headed by justice SJ Mukhopadhyay said “We have to decide whether the decision of the resolution professional to reject the bids of the first round was good or bad. Also, whether the decision of the committee of creditors to call for a second round of bids was a good decision or not.”

Essar Steel has a debt of INR 49,000 crore and was referred to the NCLT in June 2017. After the two companies were disqualified by the resolution professional under Section 29(a) of the insolvency code, which prohibits related parties of defaulting firms from participating in the resolution process, the two firms had filed appeals before the tribunal. On 19 April, NCLT had dismissed the first round of bidding for Essar Steel on the ground that the committee of creditors and the resolution professional did not follow the procedure prescribed under the insolvency code. However, it ruled that ArcelorMittal and Numetal must clear debts in defaulting companies where they hold stakes before bidding for Essar Steel.

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