The Supreme Court has nullified JSW Steel’s resolution plan for Bhushan Power and Steel Ltd, deeming it illegal and ordering liquidation. JSW’s plan involved a significant haircut for lenders, offering Rs 19,350 crore to financial creditors and ₹350 crore to operational creditors.
- Updated On May 2, 2025 at 12:31 PM IST
In a big setback, the Supreme Court on Friday rejected JSW Steel‘s resolution plan for Bhushan Power and Steel, and further ordered 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.
Following the Supreme Court’s order, the shares of JSW Steel were trading in the red at ₹970.50, down 5.76 per cent.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.
The ED had alleged that BPSL and JSW Steel were associated as shareholders holding 24.09 per cent and 49 per cent equity, respectively, in a joint venture Rohne Coal Company. Therefore, JSW is a related party of the corporate debtor, the protection under Section 32A will not be available to it, it had stated.JSW had offered to pay ₹19,350 crore to the financial creditors as part of its resolution plan, which was a near 60 per cent 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 ₹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.
- Published On May 2, 2025 at 12:30 PM IST
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