ED swoop on BPSL has lenders wary of IBC route for debt resolution

The attachment by the ED was made under PMLA and is being legally tested before the National Company Law Appellate Tribunal (NCLAT) at a time when it is in the final lap of resolution under IBC

The attachment of Bhushan Power & Steel’s (BPSL’s) assets by the Enforcement Directorate (ED) has made lenders wary of taking the Insolvency and Bankruptcy Code (IBC) route for debt resolution.

“As bankers, we are all concerned about the implication of the Prevention of Money Laundering Act (PMLA) on IBC. It would be very difficult to arrive at a resolution under the IBC and this will derail the entire process. For smaller cases, we are not keen on taking companies through the IBC route and waiting indefinitely for resolution,” says Ashok Kumar Pradhan, managing director at United Bank of India (UBI).

The attachment