CoC of Bhushan Power violated Aug 6 order: Tata Steel to NCLAT

By: | Published: November 2, 2018 2:28 AM

Tata Steel on Thursday told the National Company Law Appellate Tribunal (NCLAT) that the committee of creditors (CoC) of Bhushan Power and Steel (BPSL) had violated its August 6 order by allowing JSW Steel to revise its bid thrice even after the deadline ended.

Senior counsel Abhishek Manu Singhvi, appearing on behalf of Tata Steel, also expressed doubt “with the quality of the process” followed by the CoC in identifying the most preferred bidder for the bankrupt firm.

Tata Steel on Thursday told the National Company Law Appellate Tribunal (NCLAT) that the committee of creditors (CoC) of Bhushan Power and Steel (BPSL) had violated its August 6 order by allowing JSW Steel to revise its bid thrice even after the deadline ended. The August 6 order of the NCLAT gave permission to all prospective bidders to improve their financial bids without changing basic parameters.

Senior counsel Abhishek Manu Singhvi, appearing on behalf of Tata Steel, also expressed doubt “with the quality of the process” followed by the CoC in identifying the most preferred bidder for the bankrupt firm. Singhvi urged the NCLAT to consider directing the National Company Law Tribunal to take up the BPSL resolution matter for approval only after the adjudicating authority decides on the CoC’s conduct and its permissibility.
Tatas alleged that while there were no details of upfront payment in JSW Steel’s August 13 bid placed before the CoC, in the subsequent bid placed, just a day after, details were mentioned. Had there been no details with regards to the upfront payment, JSW Steel would have scored less in the evaluation matrix.

By allowing JSW Steel to change its bid, the CoC gave it undue chances to revise its bid after declaring Tata Steel as the highest bidder, Singhvi had earlier said.
The two-member NCLAT bench, headed by its chairperson Justice S J Mukhopadhaya, has scheduled the matter for further hearing on December 3.
As reported earlier, lenders to BSPL are understood to have backed the revised offer of JSW Steel which has offered to pay lenders Rs 19,350 crore, an additional `350 crore to the operational creditors against their admitted claims of Rs 700 crore. Bhushan Power owed lenders, led by Punjab National Bank, Rs 47,000 crore.

Tata Steel, which was initially ahead in the race, had not revised its original offer of Rs 16,500 crore for the financial creditor though it had said it would pay operational creditors Rs 500 crore. Liberty House, another contender, had offered to pay Rs 18,500 crore to the financial creditors, and Rs 350 crore to operational creditors. JSW Steel’s initial offer was Rs 11,500 crore.
If JSW Steel wins Bhushan Power and Steel, the additional 3.1 million tonne per annum steel-making capacity will catapult it to the position of the country’s largest steel company, outpacing Tata Steel, which has capacity of over 22 million tonne per annum (MTPA). JSW Steel has already taken over another insolvent firm Monnet Ispat through the Insolvency and Bankruptcy Code (IBC) route. Monnet has an annual capacity of
1.1 MTPA.
On August 1, the NCLAT had directed the CoC to decide on the most appropriate resolution plan. The CoC was asked to go through the “feasibility and matrix of the resolution plans taking into consideration revised financial offers…”.

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