Ahead of the August 7 hearing in the Supreme Court on the Bhushan Power & Steel (BPSL) matter, many insolvency experts feel that the best- case scenario for the company and all stakeholders would be one where the current management is allowed to run the company.
JSW Steel, which acquired BPSL for Rs 19,700 crore, has been running the company as its subsidiary since 2021. “The transaction happened over 4 years ago, and the company is doing well and making profits. BPSL’s creditors are also satisfied with the current management. In the present situation, it is likely that the JSW Steel’s transaction will not to disturbed, and the company will continue to run as it has been,” said a senior insolvency expert.
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On July 31 when the apex court recalled its May 2 judgement that ordered National Company Law Tribunal (NCLT) to initiate liquidation of BPSL, the SC said that all legal questions would remain open for fresh arguments.
Because the earlier liquidation was ordered on the basis of the “gross violation and non-compliances of the bankruptcy laws”, experts said that the SC could direct the regulatory body concerned, which is the Insolvency and Bankruptcy Board of India, to take action against the erring parties that could include resolution professional (RP), resolution applicant (RA) and committee of creditors (CoC).
“Since there were illegalities involved in the BPSL’s resolution process, legal action could be taken against RP, RA and CoC under the applicable laws. While the applicant could face criminal proceedings, the RP may likely face both civil and criminal charges,” said a senior corporate lawyer.
Fresh CIRP a possible option, say some experts
However, some insolvency experts said that the court might look at other options too which include inviting fresh applications for a corporate insolvency resolution process (CIRP). “The RP can publish form-G which will allow new potential resolution applicants to show their interest in acquiring BPSL. The court has to be simultaneously satisfied with JSW Steel re-applying to CIRP given that there were issues of non-compliances in the past,” said G.P. Madaan, managing partner, Madaan Law Offices.
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The BPSL’s resolution has gone through various turns in the recent past.
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