Resolution of Bhushan Power & Steel (BPSL), which is tied in legal knots, may stretch further even with the latest set of amendments to the Insolvency and Bankruptcy Code (IBC) approved by the Cabinet.
The National Company Law Appellate Tribunal (NCLAT) that is hearing an appeal from JSW Steel — the winning bidder — on Thursday set a fresh date for hearing on January 13.
Lenders had approached the Supreme Court, which was slated for hearing next week. They had moved apex court primarily on two grounds. They wanted JSW to implement the resolution plan and the Enforcement Directorate (ED) to reverse an order attaching assets of BPSL.
“The matter will come up for hearing next week,” said sources.
Lenders had written to JSW Steel after the National Company Law Tribunal (NCLT) approval for closing the transaction. However, the firm was waiting for the complications around the transaction to be ironed out.
A lender said once the notification on the amendments was done the case might be withdrawn, while another lender pointed out that there were some confusions as to whether it would apply to new cases or ongoing as well. BPSL owes lenders around Rs 47,000 crore.
Kumar Saurabh Singh, partner of Khaitan & Co, however, clarified that it would be implemented like the last amendment — both for future cases as well as for the cases that were pending implementation. Even if lenders decide to withdraw the Supreme Court appeal, the matter in the NCLAT would have to be resolved.
Early September, the NCLT had approved JSW Steel’s Rs 19,700-crore resolution plan for BPSL, but with modifications.
The NCLT, while approving JSW Steel’s plan, had disposed of the various reliefs sought from the statutory authorities under the Income Tax Act, 1961, the ministry of corporate affairs, department of registration and stamps, Reserve Bank of India, among others.
It prompted JSW to appeal against the order in the NCLAT. In its appeal, JSW sought specific relief from the Prevention of Money Laundering Act (PMLA), particularly in the context of the banks reporting a fraud in BPSL.
It also asked for relief from litigations that could come up from other authorities and finally a claim on the profits during CIRP (corporate insolvency resolution process). Even after JSW’s appeal, in October, the ED attached assets of BPSL worth Rs 4,025 crore under the PMLA. The matter is still being heard in the NCLAT.
The attachment of assets came as a jolt to resolution applicants in other cases. The Mittals were understood to have sought indemnity from past criminal liabilities for Essar Steel.
On Wednesday, the government sought to allay such apprehensions with the IBC amendments. One of the amendments aimed to ring-fence the corporate debtor from criminal proceedings against offences committed by previous management/promoters. However, some industry sources said in the case of BPSL lenders and JSW might await clarity on the IBC versus PMLA issue from the courts before closing the transaction.