NCLT approves JSW Steel's Rs 19,700-crore bid for Bhushan Power & Steel

Adjudicating authority asks RP of Bhushan Power to redistribute profit made during CIRP among all creditors

The Principal Bench of the National Company Law Tribunal (NCLT) on Thursday approved JSW Steel's Rs 19,700-crore bid for debt-laden Bhushan Power & Steel.

In a 138-page judgment, the NCLT Bench, while approving the resolution plan submitted by JSW Steel, said the committee of creditors (CoC) and the resolution professional (RP) of the corporate debtor shall continue to function as monitoring agency for now.

The adjudicating authority, however, said the RP shall redistribute the profits earned by Bhushan Power during the Corporate Insolvency Resolution Process (CIRP) among the financial and operational creditors in accordance with the National Company Law Appellate Tribunal’s (NCLAT's) judgment on this aspect in the Essar Steel case. 

JSW Steel said it was studying the judgment and would take a call on it soon.

In its judgment, the NCLT said the criminal proceedings initiated by various investigating agencies against the corporate debtor’s erstwhile board of directors shall continue in accordance with the law and would not affect the implementation of JSW Steel’s resolution plan for Bhushan Power. 

Bhushan Power owes close to Rs 50,000 crore to a consortium of lenders led by Punjab National Bank. It is the sixth out of the 12 large stressed accounts identified by the Reserve Bank of India for resolution under the Insolvency and Bankruptcy Code (IBC). The RP of Bhushan Power had admitted claims to the tune of Rs 47,204 crores from financial creditors of the company, while the operational creditors’ claims of nearly Rs 730 crores had been accepted.

The insolvency process for Bhushan Power & Steel, like Bhushan Steel, remained one of the most litigated cases to come under the IBC. Liberty House, one of the initial bidders for Bhushan Power, had at the very onset challenged the lenders’ decision to not open its bid for the company as it was late.

While the CoC had decided to close the bidding for the company on February 8, 2018, Liberty House had submitted its bid later that month on February 22. The decision of the CoC was challenged before the NCLAT, which ruled that the CoC must open all the bids that had come before it, including that of JSW Steel, Tata Steel, and Liberty House.

JSW Steel, which had initially made an offer of Rs 11,000 crore on February 8 last year, submitted a revised offer of Rs 18,000 crore on July 26. On August 13, 2018, the company improved its total offer to Rs 19,700 crore, including better payment to several classes of creditors. Tata Steel, however, did not change its bid after making the final offer of Rs 17,000 crore.

According to the resolution plan submitted by JSW Steel, financial creditors of Bhushan Power would get a total of Rs 19,350 crore against the admitted claims of Rs 47,204 crore, thereby recovering nearly 41 per cent. The operational creditors of the corporate debtor had been allocated Rs 350 crore by JSW Steel as against their admitted claims of nearly Rs 730 crore, thereby recovering nearly 48 per cent of their dues.

The NCLT also fined the erstwhile directors of the corporate debtor Rs 100,000 for seeking a copy of the resolution plan. The said amount would be submitted personally by Sanjay Singal and Aarti Singal, the adjudicating authority said.