Setback for Tata Steel as NCLAT upholds creditors decision on Bhushan Power

The National Company Law Appellate Tribunal (NCLAT) on Monday upheld the Committee of Creditors’ (CoC) decision to approve JSW Steel Limited’s resolution plan for Bhushan Power and Steel Limited, saying the committee had the right to negotiate better terms with the resolution applicants.

The appellate tribunal has remitted the matter back to principal bench of the National Company Law Tribunal (NCLT) in Delhi and asked the Resolution Professional (RP) of Bhushan Power to place JSW Steel’s bid before it for approval.

“The Adjudicating Authority (NCLT) at the time of consideration of the approved resolution plan of JSW Steel will only ensure that all the stakeholders, particularly the operational creditors, are treated similarly. It should ensure that no discrimination is being made between the financial creditors or the operational creditors,” the NCLAT said. In case the NCLT felt that the operational creditors were being discriminated against, JSW Steel should be given a chance to improve its bid and resubmit the plan, the NCLAT said.

The judgement comes in view of a plea moved by Tata Steel opposing NCLT's decision asking the committee of creditors to consider the resolution plan submitted by Liberty House. NCLT, Delhi, had on April 23 last year asked the CoC to also consider Liberty House’s resolution plan for Bhushan Power and Steel keeping in view the goal of maximisation of the assets. Tata Steel was opposed to Liberty House’ submitting a bid for Bhushan Power. It claimed that Bhushan Power had failed to participate or provide necessary documents within time and hence should not be permitted to submit a plan.

It had also accused the Bhushan Steel CoC of being biased towards JSW Steels they had allowed the latter to revise its resolution plan six times. “Prior to approval by the adjudicating authority, merely because it is CoC, it cannot have changes after changes. I am making a direct charge,” a lawyer appearing for Tata Steel had then told the NCLAT. JSW Steel had revised its offer from Rs 11,000 crore to Rs 18,000 crore and later to Rs 19,600 crore, whereas Tata Steel’s latest offer still stood at Rs 17,000 crore after it had refused to revised its bid.

Bhushan Power is one of the companies among the 12 large non-performing accounts which the Reserve Bank of India (RBI) had asked the banks to take to NCLT for debt resolution. The company owes around Rs 45,000 crore to its lenders. Tata Steel, JSW Steel, and Liberty House were the three companies bidding for Bhushan Power and Steel as the company is undergoing corporate insolvency resolution under the Insolvency and Bankruptcy Code (IBC).