The National Company Law Tribunal (NCLT) on Friday held as sustainable Bhushan Energy’s (BEL) plea to change the insolvency resolution professional (IRP) from consultancy firm Deloitte as the IRP for its already-admitted parent, Bhushan Steel (BSL), is also from the same firm. The IRP had been nominated by State Bank of India. BEL argued that since a partner from Deloitte has already been appointed as the IRP for BSL, appointing another partner of the same firm in BEL “would result in compromising the independence of the IRP because there is conflict of interest between BSL and BEL in respect of tariff rates.”
The counsel appearing on behalf of SBI, however, objected to BEL’s argument, saying it was “not well founded and is liable to be rejected.” SBI had nominated Savan Godiawala from Deolitte to act as the IRP for BEL. Advocate Ranjana Roy Gawai, representing BEL, declined to comment on the issue. On July 27, the principal bench had admitted the insolvency petition filed by a consortium of lenders led by SBI against BSL and approved the appointment of Vijay Kumar V Iyer from Deloitte as the IRP.
Incorporated in 2005, BEL is based in Dhenkanal, Odisha. It generates 485 MW of thermal power, and supplies the entire generation to BSL for use in its integrated steel plant, as per a power purchase agreement (PPA) signed between the two firms. In an affidavit to the two-member bench, BEL said the company has become a stressed asset because of cancellation of captive coal mine. Consequently, it has to depend on the spot market for purchase of coal which completely eroded its profitability.
“It is a matter of fact that since his appointment, the RP of BSL has been working in association with and in close connection with a dedicated team of Deloitte. It is also a matter of fact and record that the corporate debtor (BEL) has made various representations and requests to the RP of BSL for tariff revision and in the process, the RP and the team of Deolitte, which is assisting him in the resolution process, have access to the price sensitive, commercial and confidential information of the corporate debtor,” it said. “It is apprehended that if any resolution professional, who is registered with Deloittee is appointed as the IRP, the interest of the corporate debtor (BEL) will be compromised and severely jeopardised,” BEL said.