The resolution professional overseeing the auction of Essar Steel has called the company's lenders for a crucial meeting on Wednesday. Top on the agenda would be the eligibility of bids presented by ArcelorMittal and Numetal on February 12.
The meeting was initially called for Monday, but was postponed to Wednesday on the request of the lenders.
"Yes, there is a meeting on Wednesday. It's difficult to say exactly if the RP (resolution professional) will submit the bids to the Committee of Creditors (CoC), or if he will be discussing the eligibility. But it's crucial," said an official from a private steel company.
There is a possibility of lenders calling for a second round of bidding if the two bids don't clear the eligibility test.
The Committee of Creditors (CoC) is made of up lenders. Essar Steel was referred to the National Company Law Tribunal after accumulating nearly Rs 50,000 crore in debts.
The two bids have been evaluated by Grant Thornton and legal firm Cyril Amarchand Mangaldas.
Since the submission of bids in January, there have been several rounds of questions and submissions between the evaluators and the two bidders.
In contention has been ArcelorMittal's stake in Uttam Galva Steel, which had defaulted on loan payments.
According to an amendment in Insolvency and Bankruptcy Code (IBC), a promoter of a defaulting company cannot bid for any of the stressed assets referred to the National Company Law Tribunal.
Although the Lakshmi Mittal company had exited from Uttam Galva, doubts have continued to persist.
Similarly, Numetal's hurdle lies in minority shareholder Rewant Ruia, who is related to the Ruia family, and runs Essar Steel.
Numetal has told evaluators that its other shareholders - including Russia's VTB Capital - will be ready to buyout Rewant's stake if there is a need.
The government is believed to be exploring another amendment in the IBC, to differentiate between promoters who hold a management role in a defaulting company, from those who don't.
Source: money control