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NCLT approves JSW Steel bid for Bhushan Power and Steel, imposes costs on former Directors

Aditi Singh

The National Company Law Tribunal (NCLT), Principal Bench has approved JSW Steel Ltd’s resolution plan for debt-ridden Bhushan Power and Steel Ltd under the Insolvency and Bankruptcy Code, 2016 (IBC). This is among the top 12 large stressed assets referred by Reserve Bank of India to banks for initiation of the corporate insolvency resolution process.

The NCLT has, however, made the “acceptance and approval” of the resolution plan subject to the conditions that the amount due to the operational creditors under it must be paid in accordance with the amended Section 30(2) of IBC and would also be in compliance of all the existing laws.

In tune with the NCLAT’s judgment in the Essar Steel case, the NCLT also directed that the profits earned by Bhushan Power and Steel during CIRP shall be redistributed between creditors.

As per Mint, JSW Steel has offered an upfront cash payment of 19,700 crore to Bhushan Power and Steel’s lenders, besides infusing 350 crore into the steelmaker to revive it.

The order was passed by a two-member Bench of President, Chief Justice (Retd.) MM Kumar and Member (Techincal) SK Mohapatra in a Section 7 IBC application moved by the Punjab National Bank.

The order was reserved by NCLT in April 2019.

After the initiation of the corporate insolvency resolution process on September 26, 2017, the Interim Resolution Professional admitted claims to the tune of Rs4,72,04,51,78,073 and Rs 6,21,37,61,735 from the financial and operational creditors of Bhushan Power and Steel, respectively.

No claims were, however, received from workmen/employees and other creditors.

Tata Steel, Liberty House, and JSW Steel Ltd were the three Resolution Applicants for Bhushan Steel.

The order passed by the NCLT records that JSW Steel emerged as the “successful Resolution Applicant” after an “extensive evaluation” by the Committee of Creditors in consultation with the representatives of the operational creditors, individual resolution applicants and Directors of Bhushan Steel.

It further noted that the Plan complied with all the “all the requirements as envisaged under Regulation 38 (as it then existed) of the CIRP Regulations in as much the amount due to the Operational Creditors were to be given priority in payment over Financial Creditors” along with other statutory requirements under Section 29A, Section 30 of IBC, etc.

The NCLT also disposed of JSW Steel’s plea for relaxation, concession or waiver of statutory compliances under the Income Tax Act, 1961 etc with a  direction to JSW to file appropriate applications before the appropriate authorities.

It has further clarified that the criminal proceedings initiated against the erstwhile members of the Board of Directors and others shall not come in the way of the implementation of JSW’s Resolution plan.

We leave it open to the Members of the CoC to file appropriate applications of criminal proceedings result in the recovery of money which has been siphoned of or on account of tainted transactions or fabrication as contemplated under the various provisions o the Code or any other law.”

The NCLT also dismissed plea by two former Directors of Bhushan Power and Steel seeking copies of the Resolution Plan with a cost of Rs One lakh.

Sanjay Singal’s plea to place a “settlement propsoal” before the CoC was also rejected by the NCLT.

RP was represented by Senior Advocate Abhinav Vashishth with Shardul Amarchand Mangaldas team of Advocates Misha, Priya Singh, Charu Bansal, Shreyas, Anoop Rawat, Saurab Panda, Shantanu Chaturvedi.

CoC was represented by Senior Advocate Ramji Srinivasan with a team of Cyril Amarchand Mangaldas including Advocates Bishwajit Dubey, Srideepa Bhattacharya, Nikhil Ramdev, Sylona Mohapatra, Spandan Biswas, Surbhi Khattar and Bhupendra Verma.

JSW was represented by Senior Advocate Rajiv Nayar with L&L Partners team including Manmeet Singh, Anjali, Nishtha Chaturvedi.

Ex-Management was represented by Senior Advocates Mukul Rohatgi, AS Chandiok, UK Chaudhary with Advocates Dhruv Gupta, Arvind Kumar Gupta, Purti Marwaha, Heena Geroge.

Operational Creditors were represented by Senior Advocate AS Chadha with Advocates Nikhil Pallu, Pranav Chadha, Arjun Asthana, Sreenita Ghosh, Maru Beri, Varun Verma, Sahil Monga.  

Read the Order: