Lenders Accept Conditional Payment Offer of JSW Steel for BPSL
Committee of Creditors has agreed to close the bankruptcy process of Bhushan Power & Steel Ltd by accepting a conditional proposal of JSW Steel. Lenders voted with 97% majority to accept INR 19,350 crore upfront payments from JSW Steel on the condition of reversing the payment in case of an adverse order from the Supreme Court. JSW Steel had tied certain conditions before releasing the funds to creditors of Bhushan Power, in part to secure indemnity in an event of unfavourable SC ruling in the case, which would then return the entire sum to JSW Steel. The transaction will pave the way for JSW Steel to mark its manufacturing presence in eastern India
SBI will be the biggest beneficiary having IR 9,825.67 crore admitted claim, followed by PNB’s INR 4,399 crore. An asset reconstruction firm has debt of INR 5,275 crore, while Canara and Allahabad Bank have INR 2,244 crore and INR 2,130 crore, respectively.
The National Company Law Tribunal approved JSW’s resolution plan, overcoming initial challenges from Tata Steel and Liberty of the UK, in September 2019. JSW offer represents a 58.97% haircut for the financial creditors that had a combined exposure of INR 47,158 crore to BPSL. But the pitch was queered by the enforcement directorate, which attached assets worth INR 4,025.23 crore under the Prevention of Money Laundering Act of BPSL, following on a case against the erstwhile promoter. Even though the National Company Law Appellate Tribunal set aside the ED’s attachment, the latter has moved the apex court challenging the decision. ED also contended that JSW would not be able to take refuge under Section 32A of the bankruptcy code as JSW was a related party to BPSL as they were JV partners for a coal block in 2008. JSW contested the claim countering that the JV was guided by the policy of the day for the allocation of blocks.
Promoted by Mr Sanjay Singhal and his family, BPSL has a 2.8 million tonne steel plant in Odisha, a power plant and several downstream units across north India.