In key corporate development, a major setback for JSW Steel. The Supreme Court has rejected JSW Steel’s Resolution Plan for Bhushan Power and Steel. According to the Apex Court, The “resolution Plan of JSW was illegal and should not have been accepted by CoC.” As per several media reports, the Supreme Court has directed the liquidation of Bhushan Power and Steel.
The JSW Steel stock tanked on the back of this news. The share price of JSW Steel is now trading close to the lows of the day, down over 7%. The shares have declined over 8% in last 1 month. This is because this news is a major setback for JSW Steel. It has been targetting acquiring the company via insolvency proceedings. The Apex Court’s deciison may also have implications on the IBC’s future decisions.
In 2021, JSW got a 49 percent stake in Bhushan Steel through the insolvency and bankruptcy route. In the proposal, as per the resolution plan, JSW Steel proposed to pay Rs 19350 crore to the creditors of indebted Bhushan Steel. Further, JSW offered Rs 350 crore to the operational creditors of Bhushan Steel, although their claim stood at Rs 733 crore.
The resolution was approved by the National Company Law Tribunal. Later on, JSW Steel acquired an additional stake in the Bhusan Steel, till their total stake reached 83 percent by October 2021. However, Bhushan Steel has since been a mountain of controversies even after the acquisition by JSW Steel. ED named the company and its chairman in a Rs 47204 crore bank fraud and money laundering scam.