The National Company Law Tribunal (NCLT) has granted Bhushan Steel’s committee of creditors (CoC) permission to extend the resolution period by 90 days beyond the initial 180-day time frame. On a plea of State Bank of India, Bhushan Steel was admitted in the insolvency court on July 26, under section 7 of the Insolvency and Bankruptcy Code (IBC). The resolution professional (RP), Vijaykumar Iyer, a partner with Deloitte, made the plea for extension beyond 180 days of the admission of the case so as to allow interested parties to submit their resolution plans. According to the IBC, if the CoC and the RP are unable to find a solution in 180 days, the NCLT can grant another 90 days for the submission of the resolution plan, failing which the stressed firm goes for liquidation. Upon admission of the insolvency application, the board of a firm is suspended and the RP is responsible for the daily management of the company. The counsel for Bhushan Steel’s RP on Thursday informed NCLT’s Principal bench, headed by its president Justice MM Kumar, that six of the 13 potential buyers who did due diligence on the company requested the CoC for an extension of time for the submission of the resolution plan, prompting the CoC to make the plea. The CoC has not received any final bid yet.
The bench assented to the plea, allowing potential bidders to submit by April 22, 2018, their resolution plans for the highly-leveraged steelmaker that has a cumulative 5.6 million tonne per annum production capacity spread across Uttar Pradesh, Maharashtra and Odisha. Sources said potential bidders are in a tizzy following the November 23 Ordinance on the IBC that barred wilful defaulters, including such promoters and persons convicted of fraud, among others, from submitting resolution plan for a stressed firm. The Ordinance has also made formulation of the bid evaluation criteria difficult for the CoC. Bhushan Steel, a listed company, is promoted by the Singal family which holds a stake of 43.74%. It owes lenders Rs 48,152 crore as of March 2017. 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 is 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 IBC following several failed attempts at loan recovery.