1. Bhushan Steel, Bhushan Power and Steel face 2 fresh insolvency cases by SBI, PNB

Bhushan Steel, Bhushan Power and Steel face 2 fresh insolvency cases by SBI, PNB

The New Delhi bench of the National Company Law Tribunal (NCLT) on Wednesday admitted two separate insolvency petitions — State Bank of India (SBI) versus Bhushan Steel and Punjab National Bank (PNB) versus Bhushan Power and Steel.

By: | Published: July 27, 2017 6:45 AM
Bhushan Steel, Bhushan Power and Steel, SBI, PNB, fresh insolvency cases againt Bhushan Power and Steel, insolvency cases against Bhushan Power and Steel, Mahender Kumar Khandelwal, committee of creditors, Jyoti Structures, Monnet Ispat, Alok Industries, Amtek Auto, Era Infra, Electrosteel Steels The New Delhi bench of NCLT admitted two separate insolvency petitions — SBI vs Bhushan Steel and PNB vs Bhushan Power and Steel. (PTI)

The New Delhi bench of the National Company Law Tribunal (NCLT) on Wednesday admitted two separate insolvency petitions — State Bank of India (SBI) versus Bhushan Steel and Punjab National Bank (PNB) versus Bhushan Power and Steel. The two companies together owe banks more than Rs 80,000 crore, according to data sourced from Capitaline. The principal bench comprising President M M Kumar and Member Deepa Krishnan appointed Vijaykumar V Iyer as the interim resolution professional (IRP) for Bhushan Steel and Mahender Kumar Khandelwal as the IRP for Bhushan Power and Steel. Iyer has also been appointed the IRP for Binani Cement. Bhushan Steel, which owes banks a whopping Rs 44,447 crore had earlier objected to the insolvency proceedings alleging that SBI had inflated the dues by around Rs 100 crore. The company’s counsel had said that SBI classified both term loans and working capital as default debt but the company had not received a recall notice for the entire amount.

The counsel claimed 65% of the debt referred to as default was in the form of working capital. “By no stretch of imagination, the NCLT has been entrusted with the function to determine the amount of default. The only issue for us to examine is whether in terms of Section 4 of IBC the amount of default is rupee Rs 1 lakh or more than that, then the requirement stands satisfied,” the bench observed in its final order. The IRP, along with a committee of creditors (CoC), will come up with a resolution plan. If the committee is unable to find a solution within 180 days — this can be extended to 270 days — the company will be liquidated.

Other companies to be admitted to the NCLT include Jyoti Structures, Monnet Ispat, Alok Industries, Amtek Auto, Era Infra and Electrosteel Steels.
Last week, the privately held Bhushan Power, which owes lenders a little over Rs 37,000 crore had not objected to the insolvency proceedings but requested the court to ensure the company was treated as a ‘going concern’. Having heard the arguments, the tribunal had reserved its order at the previous hearing.

Bhushan Power said in its annual report for FY14 (latest available), it had borrowed from 41 banks, including seven foreign banks. Data from Capitaline shows the company reported a net loss of Rs 2,433 crore in FY16 on the back of Rs 8,491 crore in revenues. Bhushan Steel is promoted by the Singal family who collectively hold 43.74% in it; the firm reported a net loss of Rs 3,501 crore in 2016-17 on revenues of Rs 15,027 crore. The company claimed in the annual report for 2015-16, it has been facing severe stress in its debt servicing from past few years.

Bhushan Steel and Bhushan Power are among the 12 companies referred to NCLT benches across the country following a Reserve Bank of India press release. In its June 13 press release, the central bank had directed lenders to refer a dozen companies the bankruptcy court under the Insolvency and Bankruptcy Code following several failed attempts at loan recovery.

  1. No Comments.

Go to Top