SC scraps JSW Steel's Bhushan Power & Steel resolution, orders liquidation

Shares of JSW Steel fell 5% on Friday after the Supreme Court rejected its resolution plan, calling it 'illegal'

The Supreme Court on Friday quashed JSW Steel’s ₹19,700-crore resolution plan for Bhushan Power and Steel Ltd (BPSL), terming it “illegal” and ordering the liquidation of the debt-ridden company.   

The plan had earlier been approved by BPSL’s Committee of Creditors (CoC). On this, the apex court stated that the plan violated insolvency law as JSW had used a mix of equity and optionally convertible debentures (OCDs) to fund the takeover, instead of equity alone. It also flagged the failure to implement the resolution within the stipulated timeline.  Following the verdict, JSW Steel’s shares dropped 5 per cent. 

 

 

 

 

The ruling marks a major setback for JSW Steel, which had been vying to acquire the debt-laden firm through insolvency proceedings. 

In response to the ruling, the company said that it will review the order with its legal advisors once it receives a formal copy of the court's judgment.

 

"We learnt that the Hon’ble Supreme Court pronounced Judgment today, i.e 02-05-2025, rejecting the Resolution plan approved by NCLAT on certain grounds.  We are yet to receive the formal copy of the Order to understand the grounds for rejection in detail and its implications. Once we receive the Order and are able to review the same along with our legal advisors, we will decide on our further course of action. We shall keep the exchange informed of further developments as required under applicable laws," the statement read.

 

JSW Steel acquistion of BPSL

 

JSW Steel acquired a 49 per cent stake in BPSL through the Insolvency and Bankruptcy Code (IBC) route in 2021, beginning it acquisition journey. The acquisition had added 2.75 million tonnes per annum (mtpa) of steelmaking capacity to JSW’s portfolio in Odisha. Later that year, JSW raised its stake to 83.3% effective October 1, 2021.

 

Although JSW Steel was declared the successful resolution applicant, the deal was entangled in legal hurdles from the outset. In 2020, the Enforcement Directorate named BPSL and its former top management in a ₹47,204 crore bank fraud and money laundering case, delaying the resolution process.

 

Earlier this year, the Delhi High Court quashed money laundering proceedings against BPSL, providing some relief. However, the Supreme Court’s latest order overturns the entire resolution plan, which has once again raised uncertainty for BPSL. The ruling impacts not just JSW Steel but also BPSL’s employees, creditors, and the broader insolvency ecosystem.