Lenders refuse more time for JSW Steel to close BPSL deal

Suresh P Iyengar Mumbai | Updated on June 30, 2020 Published on June 30, 2020

The JSW Steel Ltd logo at the company's manufacturing facility in Dolvi, Maharashtra   -  Bloomberg

JSW Steel had said that raising the ₹19,700 crore has become difficult due to Covid-induced economic uncertainty

In an interesting development, financial creditors have rejected JSW Steel’s plea seeking more time to complete the deal for taking over the bankrupt Bhushan Power and Steel amid the Covid crisis.

Earlier, JSW Steel had asked the lenders to extend the deadline for making payment of ₹19,700 crore till next March as the debt-raising has become difficult due to the economic uncertainty unleashed by Covid pandemic.

Though the Supreme Court had accepted the petition filed by BPSL promoters against the deal, it had not stopped the lenders from going ahead with the deal.

The core committee — consisting of lead bank Punjab National Bank, State Bank of India and ACRE asset reconstruction company — met here on Tuesday and rejected JSW Steel’s plea, said sources close to the development.

Financial creditors will direct JSW Steel to make the payment to close the deal in the next hearing in the Supreme Court slated for July 6, the source said.

In response to a query from BusinessLine, a JSW Steel official said the matter is subjudice before the Supreme Court as all the parties in the last hearing were asked to file their submissions to the court within two weeks in response to the application filed by JSW Steel.

Pending adjudication of appeals and CoC Application before the court, the plan is incapable of implementation, more so when the assets of BPSL continue to be attached by the ED (Enforcement Directorate), he added.

JSW Steel had pipped a Tata Steel bid of ₹16,000 crore for bagging the 3.5 million tonne steel plant and was declared the winning bidder by the National Company Law Appellate Tribunal (NCLT) in September.

In a first-of-its-kind judgement, the NCLT in February gave JSW Steel the immunity from prosecution against any investigation pursued by government agencies against the previous promoters.

While the newly inserted Section 32A of the Insolvency and Bankruptcy Code (IBC) discharges new owners from any prior liability of offences committed by the corporate debtor, its applicability with retrospective effect needs to be tested as the BPSL case is one of the oldest, initiated in 2018.

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Published on June 30, 2020
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