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Tata Steel's bid for Bhushan Steel get's NCLT approval

Press Trust of India  |  New Delhi 

National Company Tribunal (NCLT) today approved Tata Steel's bid of Rs 32,500 crore, along with 12.27 per cent equity to creditors, for the debt ridden (BSL).

The tribunal accepted the plan filed by BSL's resolution professional (RP), which was approved by the (CoC) lead by SBI, after finding Tata Steel as the highest bidder.

"The application filed by the RP for accepting the resolution plan approved by the CoC submitted by resolution applicant is accepted," said a two member bench comprising NCLT Justice M M Kumar and S Mohapatra.

The tribunal also gave approval for the appointment of a monitoring agency for the deal.

NCLT, in its 85-page order, has also directed BSL's ex-management to cooperate with the monitoring agency during the implementation of the resolution plan and granted it liberty to approach it during the process.

"Liberty is grated to the monitoring agency to apply for any further direction against the ex-management, its directors or any other officers, if such necessity arrives," said NCLT.

BSL had a debt of Rs 56,080 crore from 53 financial creditors and Rs 2,846 crore from 751 operational creditors, which also include workmen, employee and statutory creditors. It had a liquidation value of Rs 14,541 crore.

The CoC had selected Tata Steel, which had offered Rs 32,500 crore as upfront payment along with 12.27 per cent equity in BSL to the creditors.

However, this was challenged by some BSL employees contending that Tata Steel was not eligible under section 29 (A) of the Insolvency and Code (IBC), which was dismissed by NCLT.

The tribunal said the plea "filed by Bhushan employees is also dismissed with cost of Rs 1 lakh to be paid by personally. The cost be deposited in the account of corporate debtor (BSL)".

The resolution plan retrieves about 67 per cent of the NPAs or bad loans and takes care of the existing employees by continuing their employment and also provide for payment of their back wages, the tribunal observed.

"We also find that when a resolution plan is submitted and the rights of employees are protected by such a plan then raising objections by the employees is a self-defeating proposition," NCLT observed, adding that "It is not permissible to tinker with the resolution plan which protect the rights of employees and there can not be any possible grievance."

The tribunal also dismissed the plea of engineering and construction major L&T, an operational creditor of BSL, which had requested for a higher preference in recovery of debt on par with the financial creditors of the corporate debtor.

The application "filed by is dismissed with cost of Rs 1 lakh," said NCLT adding that "the cost be deposited in the account of BSL".

NCLT said that it was well settled that any supplier of goods and service would fall within the meaning of expression operational creditor and "claims made by L&T would amount to rewriting the provisions of the statue, which is an impossible proposition.

Moreover the tribunal also observed that there was "no documents placed on record showing any creation of charge or security warranting a view that the L&T should be regarded as a secured creditor".

The tribunal dismissed the plea of to continue its power purchase agreement (PPA) with BSL. Tata Steel, in its resolution plan submitted, had asked to disconitnue PPA terming it as onerous.

"The objection raised by the BEL are rejected and it is held that claim made by BEL us wholly frivolus and can not be sustained," said NCLT.

On April 11, the principal bench of the tribunal had reserved its order after hearing all the sides.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, May 15 2018. 19:50 IST