The lenders of Bhushan Power and Steel (BPSL) on Thursday told the Supreme Court that they are entitled to claim interest and EBITDA of over Rs 6,155 crore from JSW Steel, which had acquired the debt-ridden firm earlier in 2021, for the delay in implementation of the steelmaker’s Rs 19,700 crore resolution plan.
Besides, earnings before interest, taxes, depreciation, and amortisation (EBITDA) of Rs 3569 crore generated during the insolvency process of BPSL from July 26, 2017 (insolvency commencement) to March 26, 2021 (resolution plan implementation) must also flow to the creditors, Solicitor General Tushar Mehta and counsel Raunak Dhillion, appearing for the Committee of Creditors (CoC) of BPSL told a Bench comprising Chief Justice BR Gavai and Justices Satish Chandra Sharma and K. Vinod Chandran.
They argued that the lenders during a meeting on Wednesday have resolved also to claim interest on delayed payments made to financial creditors. “Due to delay in implementation of the Resolution Plan, by a period of 538 days (period from October 5, 2019 (30 days from NCLT plan approval date) till March 26, 2021, calculated at SBI 1 year MCLR rate of 8.80 %, being Rs 2509.88 crore,” the lenders said, adding that interest of Rs 76.62 crore on delayed payments made to operational creditors due to delay in implementation, by a period of 908 days (from October 5, 2019 till March 31, 2022, which is the date of payments made to operational creditors).
They said that the implementation of the Sajjan Jindal-led JSW’s approved resolution plan was significantly delayed and the payments to financial creditors and operational creditors were delayed by 540 days and 900 days, respectively, which was beyond the initially approved timeline, the CoC, consisting mostly PSU banks and financial institutions, alleged.
“The erstwhile CoC allowed JSW to be unjustly enriched by permitting delay in implementation and not seeking interest and/ EBITDA for such delayed implementation,” the lenders said.
Further, the May 2 judgement which has since been recalled on July 31 had also made certain observations on seeking interest on delayed implementation of the plan by the lenders, the CoC stated in its affidavit filed before the apex court on Thursday.
The erstwhile promoters of BPSL submitted that liquidation was not the objective, but a fresh corporate insolvency resolution process (CIRP) should be initiated if the JSW's resolution plan was found to be flawed.
Senior counsel Dhruv Mehta, appearing for ex-promoter Sanjay Sighal, submitted that once a resolution plan is approved by the NCLT, the CoC’s comes to an end and it cannot continue to assert decision-making authority. "If the plan is flawed, I don't want to go to liquidation. I want a fresh process. Even in liquidation, the first priority is to sell the company as a going concern,” Mehta said, adding that the statutory scheme under the Insolvency and Bankruptcy Code (IBC) does not allow the CoC to reopen or modify a plan post-approval.
“After approval by the NCLT, the plan attains finality. The CoC has no locus thereafter. They cannot seek to terminate the plan or substitute it with a fresh one,” Singhal, also represented through counsel Soayib Qureshi, argued, while seeking setting aside of the JSW’s resolution plan.
Stating that fresh bids shall be invited for BPSL, the Singhal’s counsel also argued that JSW had failed to bring in equity infusion which it had committed under the resolution plan.
The apex court on Thursday started hearing afresh the pleas by multiple stakeholders, including the CoC, the Directorate of Enforcement, operational creditor Kalyani Transco, former promoter Sanjay Singhal, Odisha, and others, challenging JSW Steel's resolution plan for the debt-ridden company.
The SC will resume continue hearing in the case on Friday at 2PM.
The SC in a rare instant had on July 31 recalled its May 2 judgement that scrapped JSW Steel’s acquisition of BPSL and ordered its liquidation, giving interim relief to the Sajjan Jindal-led company that claimed to have infused Rs 30,000 crore to turn around the bankrupt steelmaker.
A bench led by Chief Justice BR Gavai allowed the review pleas filed by JSW Steel and BPSL’s lenders, including State Bank of India and Punjab National Bank, holding that this “is a fit case” where the judgement “needs to be recalled and the matter is to be considered afresh”.
Another bench of Justices Bela M Trivedi (now retired) and Satish Chandra Sharma had on May 2 scrapped JSW Steel’s acquisition of BPSL, four years after the transaction was closed, holding that the steelmaker’s Rs 19,700 crore resolution proposal was “illegal” and “in gross violation” of the Insolvency and Bankruptcy Code. It termed JSW’s intention “mala fide and dishonest”, saying that the company took undue advantage of pending Enforcement Directorate proceedings and did not implement its plan for two years. Justice Trivedi has since retired.
After JSW sought a review of the order, the apex court on May 26 ordered status quo on the liquidation proceedings till it decided the review petition. The lenders too approached the court with a similar review plea.
Besides, earnings before interest, taxes, depreciation, and amortisation (EBITDA) of Rs 3569 crore generated during the insolvency process of BPSL from July 26, 2017 (insolvency commencement) to March 26, 2021 (resolution plan implementation) must also flow to the creditors, Solicitor General Tushar Mehta and counsel Raunak Dhillion, appearing for the Committee of Creditors (CoC) of BPSL told a Bench comprising Chief Justice BR Gavai and Justices Satish Chandra Sharma and K. Vinod Chandran.
They argued that the lenders during a meeting on Wednesday have resolved also to claim interest on delayed payments made to financial creditors. “Due to delay in implementation of the Resolution Plan, by a period of 538 days (period from October 5, 2019 (30 days from NCLT plan approval date) till March 26, 2021, calculated at SBI 1 year MCLR rate of 8.80 %, being Rs 2509.88 crore,” the lenders said, adding that interest of Rs 76.62 crore on delayed payments made to operational creditors due to delay in implementation, by a period of 908 days (from October 5, 2019 till March 31, 2022, which is the date of payments made to operational creditors).
They said that the implementation of the Sajjan Jindal-led JSW’s approved resolution plan was significantly delayed and the payments to financial creditors and operational creditors were delayed by 540 days and 900 days, respectively, which was beyond the initially approved timeline, the CoC, consisting mostly PSU banks and financial institutions, alleged.
“The erstwhile CoC allowed JSW to be unjustly enriched by permitting delay in implementation and not seeking interest and/ EBITDA for such delayed implementation,” the lenders said.
Further, the May 2 judgement which has since been recalled on July 31 had also made certain observations on seeking interest on delayed implementation of the plan by the lenders, the CoC stated in its affidavit filed before the apex court on Thursday.
The erstwhile promoters of BPSL submitted that liquidation was not the objective, but a fresh corporate insolvency resolution process (CIRP) should be initiated if the JSW's resolution plan was found to be flawed.
Senior counsel Dhruv Mehta, appearing for ex-promoter Sanjay Sighal, submitted that once a resolution plan is approved by the NCLT, the CoC’s comes to an end and it cannot continue to assert decision-making authority. "If the plan is flawed, I don't want to go to liquidation. I want a fresh process. Even in liquidation, the first priority is to sell the company as a going concern,” Mehta said, adding that the statutory scheme under the Insolvency and Bankruptcy Code (IBC) does not allow the CoC to reopen or modify a plan post-approval.
“After approval by the NCLT, the plan attains finality. The CoC has no locus thereafter. They cannot seek to terminate the plan or substitute it with a fresh one,” Singhal, also represented through counsel Soayib Qureshi, argued, while seeking setting aside of the JSW’s resolution plan.
Stating that fresh bids shall be invited for BPSL, the Singhal’s counsel also argued that JSW had failed to bring in equity infusion which it had committed under the resolution plan.
The apex court on Thursday started hearing afresh the pleas by multiple stakeholders, including the CoC, the Directorate of Enforcement, operational creditor Kalyani Transco, former promoter Sanjay Singhal, Odisha, and others, challenging JSW Steel's resolution plan for the debt-ridden company.
The SC will resume continue hearing in the case on Friday at 2PM.
The SC in a rare instant had on July 31 recalled its May 2 judgement that scrapped JSW Steel’s acquisition of BPSL and ordered its liquidation, giving interim relief to the Sajjan Jindal-led company that claimed to have infused Rs 30,000 crore to turn around the bankrupt steelmaker.
A bench led by Chief Justice BR Gavai allowed the review pleas filed by JSW Steel and BPSL’s lenders, including State Bank of India and Punjab National Bank, holding that this “is a fit case” where the judgement “needs to be recalled and the matter is to be considered afresh”.
Another bench of Justices Bela M Trivedi (now retired) and Satish Chandra Sharma had on May 2 scrapped JSW Steel’s acquisition of BPSL, four years after the transaction was closed, holding that the steelmaker’s Rs 19,700 crore resolution proposal was “illegal” and “in gross violation” of the Insolvency and Bankruptcy Code. It termed JSW’s intention “mala fide and dishonest”, saying that the company took undue advantage of pending Enforcement Directorate proceedings and did not implement its plan for two years. Justice Trivedi has since retired.
After JSW sought a review of the order, the apex court on May 26 ordered status quo on the liquidation proceedings till it decided the review petition. The lenders too approached the court with a similar review plea.
