JSW Steel gets a breather as SC set to hear Bhushan’s plea on March 6

Suresh P Iyengar Mumbai | Updated on March 01, 2020

The Supreme Court on Friday will hear the Bhushan Power and Steel promoter Sanjay Singal petition against JSW Steel taking over the bankrupt company.

The case is watched keenly by the industry as the verdict will answer many probing questions and set a precedence for future insolvency cases.

While approving the ₹19,700-crore bid of JSW Steel for BPSL last month, the National Company Law Appellate Tribunal (NCLAT) last month provided immunity for JSW Steel from the ongoing investigation against BPSL and its promoters.

It has also approved the takeover of BPSL which has been attached by the Enforcement Directorate under Prevention of Money Laundering Act (PMLA). Singal, in his petition, has challenged the powers of NCLAT to provide such immunity and transfer rights of an asset that has been attached by ED.

The petition also questioned whether Section 32A inserted through an ordinance confers powers to NCLAT to remove the attachment made by the ED under PMLA.

Moreover, the ordinance which was passed on December 12, 2019 can be applied with retrospective effect to remove an attachment made on October 10, 2019, the petition claimed.

This apart, NCLAT has allowed the winning bidder JSW Steel to retain the Ebitda of ₹3,000 crore made during the insolvency period.

Rightfully, the petition claimed that the money should go to financial creditors.

It is submitted that during the insolvency period the company was run by the Committee of Creditors at their own cost and risk without servicing any interest in huge outstanding debt. The CoC in its affidavit filed last October made claim on Ebitda, but it has been quashed by NCLAT.

After waiting for over two-and-half years, the prolonged battle in the Supreme Court will now give the much-needed breathing space for JSW Steel as it has to cough up the entire committed money to acquire the stressed asset during the ongoing uncertainty over demand on back of coronavirus outbreak.

Published on March 01, 2020

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