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Essar Steel bid deadline may be extended

Alvarez & Marsal, the interim resolution professional of Essar Steel, has sought an extension to the NCLT

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The last date for submitting bids for Essar Steel may be extended by another three months as the due diligence is yet to be completed by prospective bidders.

Nippon Steel, Tata Steel, Vedanta Resources and ArcelorMittal are some of the major bidders for Essar Steel. Ruias, promoters of Essar Steel, are also looking to bid for the company.

Earlier deadline for submitting bids was January 29.

"Alvarez & Marsal, the interim resolution professional of Essar Steel, has sought an extension to the National Company Law Tribunal (NCLT). If the extension is granted, the bidders would get another 180 days to complete the process," said a banker close to the development.

Satish Kumar Gupta of Alvarez and Marsal (A&M) has been appointed as the resolution professional for Essar Steel.

Banks are expecting aggressive bidding for the company and hope to recover at least 60% of the Rs 50,000 crore it owes to them and foreign banks.

A senior banker said, "Looking at the keen interest evinced by bidders, we may get back over 60% of the debt."

The operational creditors have also got some claims on the company. The company now has to pay dues of over Rs 5,000 crore to be able to be eligible to bid for their own company.

According to the Bankruptcy Code, the resolution process should be completed within 180 days, which can be extended by another 90 days with the approval of the NCLT.

Following the Insolvency and Bankruptcy Code (IBC), the government came out with an NPA Ordinance on November 24, 2017, under which promoters who had dues to banks, several other categories of investors such as guarantors to debtors, and those with loans classified as non-performing assets for at least a year were barred from bidding for companies at NCLT. People who have been convicted of any offence with a prison term of more than two years, directors in companies that have been disqualified, entities barred by the capital markets regulator, those who have been found to have struck fraudulent transactions with the firm and connected entities were also disqualified from bidding to ensure that the companies moved to strong promoter groups who can successfully run the company. Later, the government clarified that if the existing promoters pay up the dues they can bid for their companies.

LONG PROCESS

  • Alvarez & Marsal, the interim resolution professional of Essar Steel, has sought an extension to the NCLT
     
  • If the extension is granted, the bidders would get another 180 days to complete the process
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