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Bhushan Energy's resolution professional may move court against Tatas

The resolution professional for Bhushan Energy is likely to move court against Tata Steel's resolution plan for Bhushan Steel

Veena Mani  |  New Delhi 

Bhushan Power & Steel
Bhushan Power & Steel

The move by Tata Steel to terminate the power purchase agreement (PPA) between and its subsidiary Bhushan Energy is set to be challenged in court.

According to sources, the resolution professional for Bhushan Energy is likely to move court against Tata Steel’s resolution plan for

The PPA relates to buying of power generated by Bhushan Energy by Tata Steel has acquired debt-ridden Bhushan Steel for Rs 350 billion through the insolvency process. Bhushan Energy is also undergoing insolvency resolution in the National Company Law Tribunal (NCLT). “The PPA between the two is a captive one and if it is terminated, the liquidation value of Bhushan Energy will go down drastically,” a source said.

Bids are usually weighed against the liquidation value of a company. If the liquidation value goes down, the chances of getting higher bids become difficult. Energy has reportedly shown an interest in acquiring Bhushan Energy. A mail sent to Tata Steel seeking comment did not elicit any response.

ALSO READ: Tata Steel likely to have an edge in battle for Bhushan Power

Bhushan Steel was one of the 12 that were referred to the based on the Reserve Bank of India’s recommendations.

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The Tata group and the group have shown keen interest in acquiring the stressed assets that are undergoing resolution under the Insolvency and Bankruptcy Code. Bamnipal Steel Ltd (BNPL), a wholly-owned subsidiary of Tata Steel, successfully completed the acquisition of a controlling stake of 72.65 per cent in Bhushan Steel last month. The Tatas have also shown an interest in acquiring Bhushan Power & Steel. It had emerged as the highest bidder for the company on the day of opening of bids. However, Liberty House claimed that its bid was higher than Tata’s. had also shown an interest in Bhushan Power & Steel.

Bhushan Energy was taken to the by State Bank of India (SBI) for not paying its dues. On June 6, the allowed an extension of 90 days for the company to find a resolution plan when it failed to find any within the 180-day moratorium. The NCLT admitted SBI’s case against Bhushan Energy in January. Bhushan Energy has dues of around Rs 5 billion to its lenders.

Within the Bhushan group, Bhushan Power & Steel and Bhushan Energy are undergoing resolution. The Singhal family-promoted together owe about Rs 444 billion to banks.

First Published: Thu, June 21 2018. 06:59 IST
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