Consider 1st batch of resolution plans in Bhushan Power case: NCLAT to CoC

The National Company Law Appellate Tribunal (NCLAT) order on Bhushan Power & Steel on Monday has put the committee of creditors (CoC) in a bind on the eve of the meeting.

The appellate tribunal has said that the CoC should consider the first batch of resolution plans at its meeting on Tuesday. 

The observation was in response to an application moved by Tata Steel. The application was mentioned before the NCLAT on Monday. The tribunal has observed that no new plan or revision will be placed before the CoC. 

However, any new plan or revision of plans, if received, will have to be kept in a sealed cover and should not be opened or considered by the CoC. 

If any revision has been opened by the CoC, it will have to be sealed and is not to be considered at the CoC meeting, the tribunal has observed.

Legal sources, however, said it meant the CoC could decide on the basis of the existing plans.

But revised financial plans could be received and kept in a sealed cover. "Whether the tribunal will accept the revised plan later is not clear," a legal source said.

Asked whether the CoC would take up only the first batch of plans, sources close to the development said the order was awaited and it would take a call. 

The tribunal, in its order dated July 20 this year, had noted: "The three 'resolution plans' which are in consonance of Section 30(2) viable, feasible and fulfill other matrix may be accepted by the majority vote of shares of the CoC."

On Thursday, JSW Steel had revised its offer for Bhushan Power & Steel to Rs 180 billion on the eve of the CoC meeting, which was to finalise the resolution plans.

The CoC on Friday decided to invite revised bids from the bidders till 9 am on July 31 in a sealed cove, while the meeting was scheduled for 10 am the same day.

Tata Steel had, over the weekend, shot off letters to lenders, objecting to a rebid. Its main reason was that a rebid was in violation of the NCLAT order that had sought a voting on existing bids and the Insolvency and Bankruptcy Code (IBC).

At the end of June, Tata Steel had received a formal communication it had been selected as the highest qualified bidder for Bhushan Power & Steel and it was invited for negotiations. 

Lenders were going to vote on Tata Steel's resolution plan as well, but fresh submissions from Liberty House and operational creditors had stayed the voting process.

Vacating its earlier stay, the appellate tribunal then directed the CoC to consider the resolution plans submitted by the three firms — Tata Steel, JSW Steel, and Liberty House. The NCLAT also directed the CoC to call all the bidders along with operational creditors and suspended the board of directors to the meeting. 

On the eve of the Friday meeting, JSW Steel revised its upfront payment to Rs 180 billion. Its earlier offer in February was Rs 110 billion. Tata Steel's offer was Rs 170 billion and Liberty House, which joined the process after the deadline, offered Rs 186 billion.