Rs 19,350-crore insolvency deal: JSW Steel says not ‘obligated’ to carry out BPSL resolution

JSW Steel’s bid of Rs 19,350 crore for BPSL was selected as the winning bid in the IBC (Insolvency and Bankruptcy Code) process.

JSW Steel is not “obligated” to implement the Rs 19,350 crore resolution plan for Bhushan Power and Steel (BPSL) till the matter related to encumbrance over the assets of the bankrupt company is “adjudicated” by the Supreme Court, said a senior management official at JSW Steel.

Seshagiri Rao, joint managing director and group chief financial officer, JSW Steel, told FE that the company is ready to implement the resolution plan and is awaiting Supreme Court’s verdict on the issue related to assets attached by the Enforcement Directorate (ED).

“As per our understanding of the Supreme Court order we are not obligated to implement the resolution plan. The encumbrance which is there by the Enforcement Directorate is required to be discussed. So we expect the Supreme Court will hear the case and it will get disposed off and will get adjudicated and then we will implement the plan. We are ready to implement the plan,” Rao said.

Rao also said that the company is not seeking more time to make the payment.

However, he added, it wants the Supreme Court to adjudicate the matter as early as possible which is taking time due to Covid-19 related issues, as hearings are not happening. “So it may take time is what we expect,” he said. According to reports JSW Steel had requested the Committee of Creditors (CoC) to give the company time till March 2021 to complete the transaction citing challenges due to Covid-19.

Rao further reiterated that the company’s interest in BPSL remains intact. “We are very keen in the asset (BPSL) and want to complete it,” he said.

Last month lenders to BPSL had intimated to JSW Steel that they would take “appropriate steps” if it does not implement the resolution plan for BPSL in two weeks, among them the invoking of guarantees. There has been no further update on the development, while a July 6 hearing in the Supreme Court was postponed and a new date of hearing is yet to come out.

JSW Steel’s bid of Rs 19,350 crore for BPSL was selected as the winning bid in the IBC (Insolvency and Bankruptcy Code) process. However, last October, the ED attached BPSL assets worth around Rs 4,000 crore in connection with its money laundering investigation linked to an alleged bank loan fraud by the company’s former promoters. The ED had attached the firm’s land, building, plant and machinery located in Odisha under the provisions of the Prevention of Money Laundering Act (PMLA). However, JSW Steel has sought immunity from all the past cases.

ED has now moved the apex court seeking scrapping of sale of BPSL to JSW Steel. The investigating agency has argued that NCLAT (National Company Law Appellate Tribunal) has no jurisdiction to unfreeze assets attached under PMLA and allow sale of those assets.

Earlier, NCLAT had provided JSW Steel immunity from the Enforcement Directorate on various charges pertaining to the former promoters. NCLAT had earlier approved JSW Steel’s bid for acquisition of troubled BPSL.