Creditors reviewing offers for debt-laden Essar Steel India Ltd. rejected the bids submitted by ArcelorMittal and Numetal as they failed to meet eligibility criteria, The Hindu reported March 21.
"ArcelorMittal and Numetal bids were ineligible under the amended Section 29 A of the Insolvency & Bankruptcy Code (IBC), that debars related parties from bidding," a source familiar with the matter told the publication.
Legal and accounting advisers recently recommended that both bids be disqualified.
ArcelorMittal's bid was considered ineligible as the steel giant owns a 29.1% stake in Uttam Galva Steels Ltd., which is listed as a delinquent borrower. Meanwhile, VTB Capital-led Numetal is supported by the son of Essar Steel promoter Ravi Ruia.
Earlier in the month, ArcelorMittal decided to team up with Nippon Steel & Sumitomo Metal Corp. for the takeover offer for Essar Steel.
Fresh bids are likely to be invited soon by the creditors. "The lenders will decide if they want to allow new bidders, who had initially shown interest in the company but did not put in their bids," another source added.
Just a day earlier, Numetal filed an application with the National Company Law Tribunal to reinforce its bid for Essar Steel.
The National Company Law Tribunal noted that any decision taken or resolution passed by the creditors' committee would be subject to the outcome of the company's application. The next hearing is scheduled for April 4.