It is obviously wrong to allow the promoters who have ruined a company and brought agony to creditors to bid for their own distressed assets. The simple reason for this is that it should be seen as an attempt to buy their assets at a heavily discounted price. Some people can also see a degree of fraud in this as the creditors are forced to take massive haircuts. The question also arises that how could the promoters arrange so much cash for bidding when they had none to run the company. Further, would it be wise to hand the company back to the ones who ruined it in the first place?
Obviously, the short-term interests of the creditors would be served better by going with whoever makes the highest bid as that would prevent them from taking big hits. But those creditors who think prudently would like to take a long-term view and think of doing further business with the revamped entity to recoup their losses. If that is the idea, then there is no point going with a discredited management. Arcelor Mittal-Nippon would bring in international expertise and good corporate policies to revive the company.