L&T moves NCLT, seeks Rs 9 billion from 'bankrupt' Bhushan Steel

A day after Tata Steel announced that it has emerged as the highest bidder for Bhushan Steel, engineering and construction major, L&T has moved the National Corporate Law Tribunal seeking its Rs 9 billion back from Bhushan Steel. L&T was operational creditor of Bhushan Steel. Bhushan is facing the Insolvency and Bankruptcy Code proceedings initiated by Indian banks after it failed to repay its debt worth Rs 470 billion.

L&T said it should be acknowledged as secured creditor for supply of capital goods to the company’s Odisha plant. Two-judge NCLT panel headed by M M Kumar has sought the views of Insolvency Resolution Professional of Bhushan Steel on Larsen’s plea and will hear the plea on March 23.

Interestingly, the IBC 2016 mandates that the IBC process should balance the interest of all the stakeholders and the resolution plan is also required to make a statement as to how it will deal with the interest fo all stakeholders. Hence, lawyers said it would be prudent for the Resolution Professional and Committee of Creditors, to satisfy this requirement. “There is a strong apprehension that in absence of any scoring for the requirement, the resolution plan can give non-financial rough deal in order to please other creditors who get better scoring and are part of decision making,” said a corporate lawyer.

As of now of the first 12 big stressed assets identified by the Reserve Bank of India in its first list, the RPs have received resolution plans for most of them but almost all are targeted to protect the interest of the lenders. Ultratech has also moved the NCLT Kolkata after its bid was rejected.

“The  IBC and the Regulations do balance interest of stakeholders of stressed assets, such as, protecting the rights of secured creditors in priority over other and giving financial creditors primacy in decision making through voting. But unless these regulations are applied proper manner, this may result into an unfair treatment of non-financial creditors,” said another bidder.