Inconsistent use of IBC: JSW refutes Arcelor allegations

Inconsistent use of IBC: JSW refutes Arcelor allegations thumbnail
KOLKATA: JSW Steel has refuted ArcelorMittal’s allegations that the Insolvency and Bankruptcy Code (IBC) was inconsistently applied, allowing the former’s bid on Monnet Ispat while disqualifying the latter from the race to acquire another debt-laden alloymaker Essar Steel.

JSW Steel, India’s leading maker of the primary infrastructure alloy, was declared eligible in its bid for Monnet Ispat, although the association with another bankrupt borrower Uttam Galva apparently caused ArcelorMittal’s first bid for Essar Steel to be rejected.

A second round of bids was later invited for Essar Steel: Arcelor-Mittal has put in a rebid and JSW Steel has also entered the fray by joining the Numetal consortium.

The debate gains significance since ArcelorMittal has filed an application at the NCLT Ahmedabad against the rejection of its bid for Essar Steel. This week, the NCLT may give its verdict, a decision that could have an impact on the opening of bids for the second round of bidding at Essar Steel. Both ArcelorMittal and Numetal have said their first rounds bids were eligible.

A legal source close to Arcelor-Mittal said that Seema Jajodia, sister of JSW group chairman and managing director Sajjan Jindal and an erstwhile promoter of Monnet Ispat, had transferred her shares in Monnet Ispat on October 24, 2017. However her name continued to be among the promoters at the stock exchanges for the quarter ended December 2017. The Monnet Ispat bid was submitted by JSW Steel on December 12, but the revised shareholding was uploaded on the exchanges only on January 27, 2018. JSW qualified for the Monnet bid.

However, ArcelorMittal’s firstround bid for Essar Steel was rejected as stock exchange records showed it remained a promoter of Uttam Galva Steels. While the company sought declassification on February 8 from the stock exchanges before submitting the bid for Essar Steel on February 12, the stock exchange approval came in March.

Listing out the difference in the two cases, JSW Steel joint MD Seshagiri Rao said: “JSW Steel has said that it did not invest in Monnet Ispat. Nor did Monnet invest in JSW shares. However, ArcelorMittal had invested in the shareholding of Uttam Galva by picking up a 29.5% stake and declaring itself as a promoter.”

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