The Committee of Creditors (CoC) of debt-ridden Bhushan Power and Steel (BPSL) on Friday undertook before the Supreme Court that the banks will return the money within 60 days if they don’t succeed in the case before it. A bench led by Chief Justice SA Bobde said that it will hear the appeals in detail on April 15. JSW Steel, whose bid for Rs 19,350 crore has been approved by National Company Law Appellate Tribunal (NCLAT), told the apex court that it will not pay till the issue is finally resolved by the SC.
JSW Steel’s senior counsel Kapil Sibal said: “I can’t make the payment as of now. How can I? The sword of damocles is hanging on my head as my assets are being attached by the Enforcement Directorate in a money laundering case. I need clarity as I have to make further investment in the company. It can’t be in limbo.” He, however, said that the Sajjan Jindal-promoted company should not be treated in default for failing to make the payment.
After the NCLT on September 5, 2019, approved the JSW Steel’s bid for debt-ridden BPSL, the Enforcement Directorate on October 10 provisionally attached the BPSL’s assets worth over Rs 4,025 crore for diversion of funds by the erstwhile management prior to the commencement of insolvency proceedings.
The BSPL assets, the ED believes were acquired from proceeds of crime. Former BPSL promoter Sanjay Singhal, who has also appealed against the approval given to JSW Steel to takeover the bankrupt company, said that NCLAT had allowed JSW to retain BPSL’s earnings before interest, tax, depreciation and amortisation (Ebitda) to the tune of Rs 3,000 crore generated during the corporate insolvency resolution process (CIRP). He said that the money should rather go to lenders and not JSW. Besides, Singal claimed that JSW was ineligible to bid as it is a “related party” of the promoters of BPSL.
Senior counsel Mukul Rohatgi, appearing for Singal, said that ten years ago JSW Steel and BPSL had formed a joint venture to bid for a coal block. However, the allotment of the coal block was canceled by the SC. The ED is still probing that case, he said, while opposing JSW’s takeover. The CoC, led by Punjab National Bank, said that PMLA proceedings should be quashed against the debt-ridden company.
Earlier, it had moved the SC seeking clarity on the primacy of the Insolvency and Bankruptcy Code over the money laundering and other laws. The ED is also in the process of filing appeal against the appellate tribunal’s order that granted JSW immunity from prosecution under the PMLA Act. The NCLAT had approved the takeover under the new amendment (under Section 32(A) to the IBC which provides immunity to the new owners from ongoing criminal proceedings against the erstwhile promoters of the company.
JSW Steel had offered to pay Rs 19,350 crore to the financial creditors of the debt-ridden BPSL, implying a near 60% haircut for lenders. Apart from this, JSW has offered to pay operational creditors a sum of Rs 350 crore against their admitted claims of Rs 733 crore. A clutch of 34 financial creditors have claimed Rs 47,303 crore from the company as on January 3, 2019, of which the RP has admitted claims worth Rs 47,150 crore. Bhushan Power is one of the 12 large stressed accounts identified by the RBI for insolvency proceedings.
via BPSL lenders tell SC they will return money if JSW Steel loses case – The Financial Express
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