JSW Steel to file review petition in SC on Bhushan Power & Steel resolution

Govt begins consultations after SC rejects JSW Steel's Rs 19,350 crore resolution plan for Bhushan Power and orders liquidation under IBC provisions

Sajjan Jindal-led steel major JSW Steel has decided to file a review petition against the Supreme Court order rejecting its resolution plan for Bhushan Power and Steel Ltd (BPSL), according to people aware of the matter.

 

Concerned over the fallout of this order, the government, at the highest level, has stepped in to intervene and is in the process of gathering inputs from relevant departments and ministries, sources told Business Standard.

 

An email sent to JSW Steel on Tuesday remained unanswered until the time of going to press.

 

In 2021, JSW Steel was declared the successful resolution applicant for BPSL — one of the ‘Big 12’ non-performing assets referred to the IBC by the Reserve Bank of India —with a winning bid of ₹19,350 crore against a default of ₹47,200 crore in loans.

 

Last week, a two-judge Supreme Court Bench rejected the JSW Steel’s 2019 resolution plan, holding it “illegal” and “contrary” to IBC provisions. The apex court also ordered the liquidation of BPSL. JSW Steel shares closed 1.18 per cent up at ₹967 apiece on Tuesday.

 

JSW Steel is expected to finalise and submit its review petition towards the end of the 30-day window, sources said.

 

Meanwhile, the Ministry of Corporate Affairs held discussions on Tuesday to brainstorm the way forward, including stressing strict adherence to prescribed timelines under the Insolvency and Bankruptcy Code (IBC).

 

While ruling out any amendments to the Code itself, sources said the Supreme Court had not identified any gaps but upheld the provisions of the Code in its order.

Insolvency experts said the apex court’s decision shows several systematic issues within the IBC that hinders the effective implementation of the resolution plan and undermines its objective.

 

“The IBC lacks adequate provisions to make RPs and CoC members accountable for acting negligently and colluding with SRAs, which compromises the interest of the creditors and stakeholders,” said Vijay K Singh, senior partner, S&A Law Offices.

 

In its order, the top court said the committee of creditors “failed to exercise its commercial wisdom while approving the resolution plan of JSW”, which was again in “absolute contravention” of the mandatory provisions of the IBC and CIRP regulations. The SC also made sharp observations about the role of the RP overseeing the process. It found that the RP had “utterly failed” to discharge his statutory duties under the IBC and CIRP regulations.