Supreme Court on May 2 rejected JSW Steel's resolution plan for Bhushan Power and Steel Ltd (BPSL) and directed for its liquidation.
The apex court said JSW Steel's Committee of Creditors (CoC) plan for Bhushan Power was illegal and should not have been accepted by CoC. JSW Steel’s ownership in BPSL is 83.3% with effect from October 1, 2021.
The apex court's ruling cited two key reasons for its decision: JSW’s use of a mix of equity and optionally convertible debentures (OCDs) to complete the takeover — when it should have been executed only through equity — and a failure to implement the plan within the timeframe mandated under insolvency law, the channel reported, reported CNBC-TV18.
At 1:30 pm on May 2, JSW Steel's shares on BSE were trading 6% lower at Rs 965 apiece.
"We learnt that the Hon’ble Supreme Court pronounced Judgment today i.e 02-05-2025 rejecting the Resolution plan submitted by the Company and approved by NCLAT, on certain grounds. We are yet to receive the formal copy of the Order to understand the grounds for rejection in detail and its implications. 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," said JSW Steel in a statement.
JSW Steel had emerged as the successful resolution applicant with its Rs 19,700-crore bid for BPSL.
Earlier this year, the Delhi High Court had set aside the money laundering proceedings against BPSL.
In a prosecution complaint in 2020, the Enforcement Directorate named BPSL as an accused along with the erstwhile chairman and managing director who were allegedly involved in the offence of money laundering in relation to a bank fraud to the tune of Rs 47,000 crore.
BPSL was dragged to insolvency by lenders led by Punjab National Bank (PNB) after the company failed to pay loans within the stipulated time-frame. It had Rs 47,158 crore of admitted claims.
BPSL was in the first list of 12 companies by the RBI, against whom the banking regulator had directed banks to file insolvency in the NCLT. It was auctioned to recover Rs 47,158 overdue loans.
PNB is expecting to recover a substantial Rs 3,800 crore from BPSL under debt resolution in NCLT, which will help it achieve the target of Rs 8,000 crore cash recoveries during this fiscal, its managing director and CEO S S Mallikarjuna Rao said earlier this year.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
