Bhushan Power Insolvency Resolution May Run Into Promoter Block...Again.
Bhushan Power and Steel Plant operates close to a river in the Sambalpur district of Orissa, India. (Photographer: Sanjit Das/Bloomberg News)

Bhushan Power Insolvency Resolution May Run Into Promoter Block...Again.

Just as Bhushan Power and Steel Ltd.’s insolvency resolution case neared conclusion in the Supreme Court, former promoter Sanjay Singhal has made one more attempt to block the resolution plan.

In a new application filed on March 8, Singhal has requested the top court to order a stay on the implementation of the winning plan submitted by JSW Steel Ltd. Or else, says Singhal, there will be severe prejudice caused to his appeal challenging the approval of the plan by the company law tribunal and appellate tribunal.

JSW Steel’s resolution plan was granted approval by the National Company Law Tribunal in September 2019 after a majority of the committee of creditors at Bhushan Power voted in favour of the bid. However, next month central investigating agency, the Enforcement Directorate, attached Bhushan Power’s assets worth Rs 4,000 crore. This jeopardised the insolvency resolution until December, when the central government amended the Insolvency and Bankruptcy Code to provide that criminal proceedings against former promoters will not affect a resolution applicant when acquiring a stressed firm.

The National Company Law Appellate Tribunal subsequently vacated the attachment of Bhushan Power’s assets as well as approved JSW Steel’s bid for the company. But the Enforcement Directorate moved Supreme Court to argue that the IBC amendment should not apply to this case. The case has been pending conclusion at the apex court.

Meanwhile, the lenders to Bhushan Power last week agreed to JSW’s condition that funds to acquire the company be transferred to an escrow account till the Supreme Court decides on the matter.

Bhushan Power was part of the first list of 12 companies that the Reserve Bank of India identified for immediate referral for bankruptcy proceedings in 2017.

Singhal, in his new application, said that the resolution plan has not been implemented despite repeated requests of the CoC as issues of eligibility and quantum of payment are pending before the top court. He’s also argued that the ED’s case goes against JSW Steel.

It is submitted that in view of the grave allegations made by Enforcement Directorate questioning the tenability of the resolution plan, the same cannot be implemented in any manner. Especially where the resolution applicant has itself not implemented it for a period of more than one year.
Sanjay Singhal’s Application

The former promoter has requested the Supreme Court to:

  • Direct status-quo to be maintained and stay the implementation of the resolution plan.

  • Restrain the committee of creditors from allowing JSW Steel to access/take control or manage the affairs of the BPSL plan directly or indirectly.

The date when Singhal’s application will be heard is not known yet.

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