May prefer fresh insolvency process, say Bhushan Power & Steel lenders

Lenders of Bhushan Power & Steel (BPSL) on Tuesday indicated before the National Company Law Tribunal (NCLT) Delhi that they may prefer a fresh insolvency process for the company rather than sending it for liquidation.

 

"Every option is under consideration because this will have to be clarified by the honourable court... We may even persuade the court to initiate a fresh CIRP (Corporate Insolvency Resolution Process) because the ultimate object of the IBC (Insolvency and Bankruptcy Code) is to preserve the company as a going concern. Liquidation is the ultimate death,” Solicitor General Tushar Mehta, appearing for the lenders and other stakeholders, told the NCLT.

 

The tribunal was hearing a plea filed by BPSL's former promoter Sanjay Singhal, seeking enforcement of the Supreme Court’s recent order directing the company’s liquidation.

 

The apex court had on May 3 declared JSW Steel Limited’s resolution plan for BPSL “illegal” and ordered the latter’s liquidation, four years after the company was acquired by JSW Steel under the IBC.

 

The NCLT on Tuesday adjourned the case to May 30, after Mehta urged the tribunal to allow Singhal to identify and implead all necessary parties.

 

“Let him (Singhal) consider whom he would wish to join, or who are necessary parties, before even notice is issued, and thereafter we can issue,” Mehta told the bench led by Justice R Sudhakar.

 

On the other hand, Singhal's lawyer urged the tribunal to appoint someone to take control of the company’s assets to prevent potential “siphoning” of assets.

 

In his plea before the NCLT, Singhal urged the tribunal to take on record the apex court order, and give necessary directions to appoint a liquidator.

 

The top court had ruled that prior resolution efforts were invalid due to JSW Steel’s ineligibility under Section 29A of the IBC. Section 29A bars certain individuals or entities from submitting resolution plans during an insolvency process. The move revives years-long insolvency litigation over the steelmaker, once pursued by JSW Steel in a stalled acquisition effort.