New Delhi, Feb 20 | JSW Steel is all set to wrap up one of the long-drawn and high profile insolvency resolution cases, as it is likely to pay Rs 19,700 crore to acquire the bankrupt Bhushan Power and Steel Ltd by March 15, sources said.
On Monday, the National Company Law Appellate Tribunal (NCLAT) had permitted JSW Steel to acquire the bankrupt company and granted it immunity from prosecution by the Enforcement Directorate (ED).
Sajjan Jindal-led JSW Steel had faced a number of challenges, apart from the usual competition in terms of bids and resolution plans.
Last September, the National Company Law Tribunal had approved its resolution plan to takeover the insolvent company, but the Enforcement Directorate, investigating alleged fraud committed by the debt-laden firm’s previous management, had attached the assets of BPSL which, it believed, were acquired from proceeds of crime, following which JSW Steel moved the NCLAT to seek immunity from the proceedings.
In October, NCLAT put JSW Steel’s payment to acquire BPSL on hold and asked the ED to release BPSL’s attached properties. The appellate tribunal had also asked the ED not to attach any more property of BPSL without its permission.
A major relief came for JSW Steel after the government in December 2019 made changes in the Insolvency and Bankruptcy Code (IBC), including protection of buyers from criminal proceedings against previous promoters of the bankrupt firm.
It introduced Section 32A to the IBC, which provides immunity to the new management of a distressed company acquired under the code.
In an affidavit filed before the NCLAT, the ED however opposed JSW Steel’s immunity in the BPSL matter.
Bringing an end to the tussle, a two-member bench, headed by NCLAT Chairman Justice SJ Mukhopadhaya on Monday said that the acquirer, JSW Steel, will be rendered immune from the acts done by the former promoters of BPSL. However, it added that the prosecution of the former promoters under the money laundering Act would continue.
The transfer of the bid amount of Rs 19,700 crore would be another major achievement for the over three-year old IBC, after the successful acquisition of the bankrupt Essar Steel by ArcelorMittal in December.
Just as Essar Steel, Bhushan Power and Steel also was among the first 12 cases to be referred by the Reserve Bank of India for resolution under the IBC in 2017.