Coming down heavily on Bhushan Power and Steel’s (BPSL) resolution professional (RP) for not allowing operational creditors’ representative in the committee of creditors’ meeting, the National Company Law Appellate Tribunal (NCLAT) on Tuesday stayed the scheduled voting of the lenders to finalise the most preferred bidder for the bankrupt firm till the next hearing on July 20.
The two-member NCLAT bench, headed by chairman justice SJ Mukhopadhaya, said that “no voting can be held in the absence of any meeting” and directed, “The CoC (committee of creditors) should not proceed with the meeting at present. If the meeting is fixed today, let it be adjourned for two days. Let the matter be listed on Friday.”
The appellate tribunal’s directive came after the operational creditors’ senior counsel Sanjiv Sen alleged that its representative, senior advocate Sumant Batra, was neither informed by the RP about the meeting, held on Monday, nor allowed to attend the meeting, even though the appellate tribunal had earlier directed the CoC to “record the suggestions” of the operational creditors or their representative at the time of considering the resolution applications. The CoC at its meeting had decided to go for e-voting.
Sen said that Bhushan Power and Steel owes around Rs 1,500 crore to 1,766 operational creditors. The company owed over Rs 47,000 crore to the financial creditors, as on March 31, 2017.
The bench has also asked BPSL’s RP, Mahender Kumar Khandelwal, to appear in person at the next hearing, where it would decide whether contempt of court proceedings should be initiated against him or not.
Tata Steel, JSW Steel and UK-based Liberty House have submitted bids for BPSL. Liberty House was a late bidder in BPSL and its bid was considered at the instance of the National Company Law Tribunal (NCLT). Tata Steel, which had emerged as the highest bidder before the NCLT directed that Liberty’s bid should be considered, had challenged the NCLT’s order in the NCLAT. In its May 9 order, the NCLAT said while Liberty House’s bid should be considered, the lenders should not disclose the identity of the highest bidder till it decides on the petition. However, on July 12, the NCLAT lifted its earlier stay and asked BPSL’s lenders to move ahead with the resolution process and approve an appropriate resolution plan and place it before the NCLT seeking its go-ahead.
Tata Steel had reportedly offered to make an upfront payment of Rs 17,000 crore to the lenders, higher than JSW Steel’s offer of Rs 11,000 crore. According to sources, Liberty House has offered to pay Rs 18,500 crore, though this could not be confirmed.
During the proceedings on Tuesday, Liberty House’s counsel, senior advocate AS Chandioke, submitted that just at the time of the meeting of the CoC, the RP gave it a 19-page check list seeking the company’s compliance on Section 29A of the Insolvency and Bankruptcy Code (IBC). Though the bench asked them to clarify to the RP and CoC over clarification sought on compliance of Section 29 A of the IBC, Mukhopadhaya wondered, “It is not clear as to what clarification is to be given under 29A if the resolution applicant has given all information. He is not supposed to give any further information. If any clarification is required to be taken, then it has to be taken at CoC meeting in which the resolution applicant is required to be called.”