Tata Steel takes over Bhushan Steel, albeit, with hiccups

Bhushan Steel Limited has emerged as the first company from the RBI’s first list to have successfully resolved with the winning Resolution Applicant taking over the management..The resolution plan is being implemented by Tata Steel Limited (TSL) through its subsidiary Bamnipal Steel Limited (BNSL) by taking a controlling stake of 72.65% in Bhushan Steel..Piyush Goyal, temporary Finance Minister, said that for the first time such a large loan resolution has been achieved through upfront payment received by Banks through sale of a company..An investment from BNPL in Bhushan Steel has been done through a combination of an equity of Rs. 158.89 crore and inter-corporate loans of Rs. 34,973.69 crore. Additionally, Rs. 100 crore has been paid by BNPL to the financial creditors of Bhushan Steel as consideration for novation of remaining financial debt of Bhushan Steel..The deal is being financed through a combination of the external bridge loan of Rs. 16,500 crore availed by BNPL and balance amount through investment by TSL in BNPL. The bridge loan availed by BNPL is expected to be replaced by debt raised by Bhushan Steel over time..While Electrosteel’s resolution plan was the first to have been approved by the NCLT from the RBI list, the order was immediately appealed by Renaissance Steel and is currently pending with the NCLAT..In Bhushan Steel matter, the NCLT had passed an order on May 15 approving the resolution plan submitted by TSL. The plan was however opposed by several: L&T which wanted to be treated as a secured creditor and be placed above rest operational creditors; Bhushan Energy Limited (BEL) for termination of Power Purchase Agreement(s) between Bhushan Steel and itself; by Bhushan Steel employees challenging the eligibility of TSL/BNPL under Section 29A of the IBC..While all the objections were struck down by the NCLT, there remains a critical issue insofar as the representatives of TSL are allegedly being intimidated by people close to the former promoter of the company..Further, the plan has been also been challenged in the NCLAT by promoter Neeraj Singhal which will be next heard on May 21..The liquidation value of Bhushan Steel was Rs. 14,541 crore but creditors received almost 4 times the amount (Rs. 36,400)..Settlement of amounts equivalent to Rs.35,200 crore towards financial creditors of Bhushan Steel is being undertaken as per the terms of the resolution plan. Rs. 1,200 crore will be paid to the operational creditors of Bhushan Steel over a period of 12 months as per their limited claims. So, overall, the creditors stand to receive Rs. 36,400 crore as per the debt resolution plan..AZB & Partners acted for Tata Steel and the M&A team was led by Partners Shameek Chaudhuri and Nilanjana Singh and the insolvency proceedings were handled by Partners Vijayendra Pratap Singh and Anindita Roychowdhury along with Senior Associates Aditya Jalan, Medha Marathe, Shwetank Ginodia and Associates Dhruv Bhuta, Priyank Ladoia and Aman Sharma. Karanjawala & Co. also assisted in the proceedings through a team led by Senior Partner Ruby Ahuja along with Senior Associate Tahira Karanjawala with support from Sahil Monga..Resolution Professional was represented by Luthra & Luthra and transaction was led by Partner Sameen Vyas along with Associates Vishrut Kansal and Harneet Kaur. Partner Anshul Jain and Managing Associate Vivek K. Agarwal advised on the corporate secretarial aspects of the transaction. The litigation team was led by Partner Manmeet Singh along with Senior Associate Anugrah Robin Frey and Associates Anjali Anchayil and Geetanjali Shahi..Shardul Amarchand Mangaldas advised COC on Corporate insolvency resolution process of Bhushan Steel Limited..The corporate insolvency resolution advisory and transaction team was led by Executive Chairman Shardul Shroff along with Partner Anoop Rawat, Senior Associates Kushal Sinha, Sourav Panda and Sagar Dhawan and Associates Dhrupad Pant and Pulkit Chandak formed part of the corporate insolvency resolution advisory and transaction team..Partner Misha and Associates Vaijayant Paliwal and Ranjeev Khatana (Associate) formed part of the litigation team handling the court-process in relation to the corporate insolvency resolution process.