Lenders are exploring the possibility of settlement of dues of Uttam Galva Steels, a move that could ease the way for ArcelorMittal’s bid for Essar Steel. ArcelorMittal was an early investor in Uttam Galva Steels. A counsel for State Bank of India, the lead lender to Uttam Galva Steels, on Tuesday said before the Mumbai bench of the National Company Law Tribunal (NCLT) that lenders were exploring the possibility of a settlement with the company. In case a settlement was reached, the insolvency proceedings might not be required. But the settlement would have to be reached by April 10. Uttam Galva Steels Promoter Ankit Miglani declined to comment on the development. ArcelorMittal also did not comment. Uttam Galva Steels had become an issue for ArcelorMittal’s bid for stressed assets when the government amended the Insolvency and Bankruptcy Code (IBC) and introduced Section 29A. It prevented promoters of companies with non-performing assets (NPAs) for more than a year from submitting resolution plans, if they did not pay the overdue amount with interest. ArcelorMittal held a 29.05 per cent stake in Uttam Galva Steels. The L N Mittal-led company, however, was a passive investor with no board representation or management control. On February 7, prior to the submission of the Essar Steel bid, ArcelorMittal Netherlands BV transferred its entire shareholding in Uttam Galva to Sainath Trading Company for Rs 1 a share. But questions were still raised about ArcelorMittal’s promoter status at the time of Uttam Galva Steels turning into an NPA. State Bank of India (SBI) had already moved a petition for beginning insolvency proceedings against Uttam Galva Steels, but it had not been admitted by the tribunal, sources close to the development said.
The amount, mechanism and a detailed framework would be worked out, but first the process of insolvency proceedings had to be halted. The discussions were taking place at the highest level, sources added.