On Friday, ArcelorMittal was declared the highest bidder for Essar Steel Ltd. Its winning bid of ₹42,000 crore gives the world’s largest steel producer a sizeable foothold in the Indian steel market. Essar Steel’s financial creditors have got a good deal The bid value represents 85% of the ₹49,395 crore of their claims. It’s up to them to ensure better appraisal and risk management to ensure they don’t find themselves in this position again. The insolvency framework may appear to be another winner in this case, but that’s not entirely true. These final bids were submitted subsequent to a Supreme Court order. The court held that these defaults must be cleared before the bids were submitted. The court had actually held the ArcelorMittal and Numetal Mauritius bids as ineligible, since related corporate debtors of both bidders were defaulters. However, it made an exception in the Essar Steel case, on a request from the committee of creditors, giving the bidders one more chance to clear defaults What has become clear is bidders cannot be eligible by simply selling their stakes, just prior to submitting bids, in related defaulting entities. That’s why ArcelorMittal paid ₹7,469crore of debt of Uttam Galva Ltd and KSS Petron Pvt. Ltd to become eligible. To that extent, ArcelorMittal’s investment is higher in its bid to buy Essar Steel.