MUMBAI/NEW DELHI: The Ruias on Thursday mounted a stunning last-ditch effort to retain the flagship Essar Steel within the family. Led by brothers Shashi and Ravi, they offered Rs 54,389 crore to lenders for settling all claims and allowing the company to exit the bankruptcy process. Indications are that they might be willing to go up to Rs 60,000 crore.The development comes even as creditors voted over Tuesday, Wednesday and Thursday in favour of ArcelorMittal's Rs 42,000-crore bid for Essar Steel. The latest move will shift the battle back to the court, delaying the sale process of Essar Steel, besides putting pressure on ArcelorMittal to up its bid.The Ruias' offer consists of an upfront cash payment of Rs 47,507 crore to all creditors, including Rs 45,559 crore to senior secured financial creditors. The proposal, made under section 12A of the bankruptcy rules, will lead to "full upfront recovery of loans for the lenders, and maximum recovery for all other classes of creditors", Essar Steel said in a statement.Section 12A states that a bankruptcy application can be withdrawn by the party that has filed it — SBI, in the case of Essar Steel — provided 90% of the lenders approve it. However, the recently amended rule states that such a withdrawal can only take place before the bidding process starts. The Ruias contend that the amended version came in June this year while the bankruptcy process of Essar Steel started in October 2017.ArcelorMittal, however, doesn't agree with this. The world's No. 1 steelmaker maintained that Section 12A "doesn't apply to the resolution process of Essar Steel". "Any application to withdraw must be submitted prior to the issuance of the invitation for expressions of interest and must be accompanied by a bank guarantee for the specified amounts," the Lakshmi Mittal-controlled giant said in a statement an hour after Essar's offer. "We expect the (auction) process to continue as per the clear terms of the bankruptcy code," it added.The Ruias, said people close to the development, will disclose the funding arrangement to the creditors once its offer is accepted. Speculation is that Chinese bank ICBC will be a key lender to the transaction. The latest offer covers the dues of Orissa Slurry but not those of other Essar group companies such as ports, power and shipping. Sources said Essar could up the offer to Rs 60,000 crore to pay for the dues of a few other group entities as well.Bankers appeared divided in their interpretation of the latest developments. Some argued that fresh offers should not be accepted once the entire insolvency process is completed. Others opined that the process has not been completed in the Essar case, where ArcelorMittal was the only declared preferred bidder but no letter of intent was issued. They also pointed out that legal challenges by Russia's VTB-Numetal consortium is still pending in the SC.A number of bankers wondered why the Ruias didn't make this offer earlier. "If they are in a position to pay now, then why not earlier? RBI rules state that if a borrower has the ability to pay and does not pay then it can be classified as a wilful defaulter," said a banker.ArcelorMittal said that "it has complied with the Supreme Court order, settled the overdues of Uttam Galva and KSS Petron, and has bank guarantees in place for the payment of Essar Steel". The Supreme Court had directed ArcelorMittal to clear the Rs 7,469-crore arrears of non-performing assets — Uttam Galva and KSS Petron — in which it had held stakes before submitting a bid for Essar Steel.Essar sources said ArcelorMittal was "misrepresenting" the process. They said that section 12A was introduced in June 2018 and included the cases which were beyond EOI (express of interest) stage, "A reasonable view can be taken that an opportunity should be given to all ongoing cases to withdraw from CIR (corporate insolvency resolution) process by giving full recovery to secured lenders. Few lenders of Uttam Galva and related entities such as GPI Textiles and Gontermann Peipers (India) Ltd have not been paid and they are demanding from ArcelorMittal the payment of their overdues," said a source.Essar Group's director Prashant Ruia said the steel company got into difficulty because of external factors. "The value and quality of the asset can be ascertained from the interest shown and value offered by all the global steel majors… In fact, even after the onset of the insolvency resolution process, the shareholders of Essar Steel had made offers to settle the debt of the company, but the lenders did not accept them. We believe our current proposal will provide 100% recovery to secured creditors and lenders and maximum recovery for unsecured creditors. This is well in excess of that offered in the proposal under consideration and is in line with value maximisation, which is the underlying principle of the bankruptcy process," Ruia said.