Ex-promoters can't hold stake in insolvent firm, says Supreme Court

In March 2022, the NCLAT dismissed an appeal filed by the Singhals that challenged the October 2021 NCLT order that asked the promoter group to sell their 25 mn shares at Rs 2 a piece to Tata Steel

The Supreme Court closed the doors on defaulting promoters looking to keep a residual stake even after their company is sold off under the insolvency process, the BusinessLine reported.

While hearing the Bhushan Steel case, where the promoters were holding onto a 2.35 per cent stake even after Tata Steel acquired a 72.65 per cent stake in the company, the Supreme court ruled that ex-promoters cannot hold a stake in the insolvent firm.

Justice MR Shah and Justice Krishna Murari dismissed former Bhushan Steel promoter Neeraj Singal’s appeal against Tata Steel for the transfer of the residual shares. The two-judge