Big blow: SC rejects JSW Steel's Bhushan Power and Steel resolution plan
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In a big setback, the Supreme Court on Friday rejected JSW Steel 's resolution plan for Bhushan Power and Steel and ordered the liquidation of the steelmaker.The top court said that the resolution plan of JSW was illegal and should not have been accepted by committee of creditors. During the hearing, the apex court said that the intentions of JSW Steel were 'malafide and dishonest' as it took undue advantage of pending ED proceedings and did not implement the resolution plan for two years which frustrated the objective of IBC.A Bench led by Justice Bela Trivedi said that "the respondents JSW Steel, committee of creditors (CoC) and the resolution professional sought to sweep many seminal issues under the carpet" to cover up gross violations of the provisions of Insolvency and Bankruptcy Code, 2016. The bench said that it has examined the non-compliance and violations of mandatory provisions of the 2016 Code at the instance of JSW Steel, CoC and resolution professionals at pre-approval and post-approval stages of resolution.The judges that there was malafide and dishonest intention on the part of JSW Steel in securing the highest score for its plan, making misrepresentation before court and then not implementing the same under the garb of the Enforcement Directorate proceedings against Bhushan Steel.The resolution professional had utterly failed to discharge his statutory duties contemplated in the Code, they added.J Trivedi also said that the CoC had failed to exercise its commercial wisdom by approving the resolution plan of JSW Steel, which was in contravention of the mandatory provisions of IBC. The lenders had also failed to protect the interest of the creditors by taking contradictory stands before this court and accepting the payment from JSW Steel without any measure and supporting the latter to implement its motivated plan against the interest of creditors, according to the judgment.Following the Supreme Court's order, the shares of JSW Steel were trading in the red at Rs 970.50, down 5.76%. "Once we receive the Order and are able to review the same along with our legal advisors, we will decide on our further course of action. We shall keep the exchange informed of further developments as required under applicable laws," said a JSW Steel spokesperson.JSW had offered to pay Rs 19,350 crore to the financial creditors as part of its resolution plan, which was a near 60% haircut for the lenders. Apart from this, JSW had offered to pay operational creditors a sum of Rs 350 crore against their admitted claims of Rs 733 crore. In the 'Corporate Insolvency Resolution Process' of 'Bhushan Power & Steel Limited', the 'Resolution Plan' submitted by 'JSW Steel Limited' was approved by National Company Law Tribunal on September 5, 2019 with certain conditions.Back in 2024, the Supreme Court directed the Enforcement Directorate (ED) to handover to JSW Steel the debt-ridden Bhushan Power & Steel's properties worth Rs 4,025 crore that were provisionally attached in 2019 in connection with a money laundering probe linked to an alleged bank loan fraud by the erstwhile management.The NCLAT had on February 17, 2020 upheld the NCLT's decision and ruled that JSW Steel (the successful resolution applicant) cannot be held responsible for the alleged misdeeds of the past promoters at any stage.The Enforcement Directorate had in 2020 moved the Supreme Court seeking stay on the National Company Law Appellate Tribunal's order that approved the JSW Steel's bid for BPSL under the new amendment (under Section 32(A) to the IBC) that provides immunity to the new owners from ongoing criminal proceedings against the erstwhile promoters of the company.
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