Bhushan Power: First decide on ED case, will pay after that, JSW Steel tells SC

As is known, JSW Steel had offered to pay Rs 19,350 crore to the financial creditors as part of its resolution plan, which was a near 60% haircut for the lenders.

JSW Steel, whose resolution plan has been approved by the National Company Law Tribunal (NCLT) and the appellate tribunal to take over the bankrupt Bhushan Power and Steel (BPSL), on Wednesday told the Supreme Court that it was not possible for it to pay the lenders and then wait for the outcome of the Enforcement Directorate’s proceedings against the old management in an alleged money laundering case.

Appearing on behalf of JSW Steel, senior counsel Harish Salve said that the company runs the risk of being held responsible by the ED for the alleged misdeeds of the earlier management, and hence paying up as per the demands of the committee of creditors is not feasible at this stage. Salve, therefore sought disposal of the case at the earliest. JSW Steel earlier missed the deadline of March 17 to make the payment of Rs 19,350 crore as per approval from National Company Law Appellate Tribunal (NCLAT).

It told the apex court that it is keen to close the deal as soon as the SC approves it.

Senior counsel Abhishek Manu Singhvi, appearing for CoC, said that the lenders are losing money every day due to the delay in implementation of the resolution plan by JSW Steel. He submitted that that the resolution plan of JSW Steel has been approved by the RP, COC, NCLT and also the appellate tribunal, but due to delay in the implementation, the financial creditors, including 11 public sector banks, are incurring a daily interest loss of Rs 4.11 crore. “The corporate insolvency resolution process (CIRP) began in 2017, but the matter has been stuck on technicality and JSW is taking advantage of it,” Singhvi said.

A bench led by Chief Justice SA Bobde posted the matter for final hearing in the first week of September after observing that it will be in everyone’s best interest to bring this case to a close since three years have already passed.

As is known, JSW Steel had offered to pay Rs 19,350 crore to the financial creditors as part of its resolution plan, which was a near 60% haircut for the lenders. Apart from this, JSW had offered to pay operational creditors a sum of Rs 350 crore against their admitted claims of Rs 733 crore.

After the NCLT on September 5, 2019, approved the JSW Steel’s bid, the ED in October provisionally attached BPSL’s assets worth over Rs 4,025 crore for diversion of funds by the erstwhile management prior to the commencement of insolvency proceedings. Though the attachment was lifted by the NCLAT which ruled that JSW Steel cannot be held responsible for the alleged misdeeds of the past promoters at any stage, the ED appealed against the order in the SC.

The SC, which has been hearing the case, did not stay the resolution plan but admitted the case. It has told the CoC that if JSW Steel makes the payment but finally loses the case, then the lenders should return the money within 60 days.