Implications of Apex Court order in Bhushan Power and JSW deal
The Supreme Court's order to cancel the resolution plan which involved JSW Steel's acquisition of Bhushan Power and Steel Ltd (BPSL) at Rs. 19,350 crore has triggered shock waves among IBC stakeholders. The matter was pursued by BPSL’s operational creditors, who challenged the approval of the resolution plan on the grounds that their claims were unfairly treated and key procedural lapses had gone unaddressed. The government and committee of creditors (CoC) are working on likely legal remedies ahead of them. The SC's verdict may have an unprecedented impact in the financials of banks and other lenders represented by the CoC and JSW Steel itself. Many fear hit on the balance sheet may severe the business growth for lenders and the company if SC's judgement is upheld even after seek any legal remedial actions. The SC ruling highlights procedural and legal lapses in one of the most high-profile takeovers under the Insolvency and Bankruptcy Code (IBC), as the apex court raised questions around missed timelines, inconsistent creditor oversight, and the role of promoter-linked structures in resolution plans that were allowed to proceed despite non-compliance on several fronts.
The Ministry of Corporate Affairs (MCA) and the Insolvency and Bankruptcy Board of India (IBBI) are also studying the Supreme Court order in the Bhushan Power and Steel (BPSL) matter to assess its implications for the Insolvency and Bankruptcy Code (IBC). In 2021, JSW Steel had been declared the successful resolution applicant for BPSL — one of the ‘Big 12’ non-performing assets referred to the IBC.
