Legal experts have differed in their interpretation of the Insolvency and Bankruptcy Code, 2016 (IBC), on the issue of eligibility of bids received after the RP's deadline.
Beleaguered steelmaker Bhushan Power and Steel is likely to see a second round of bidding to ensure lenders recover the maximum amount of their dues from the sale of the asset, sources close to the development told FE. The company, which owes more than Rs 47,000 crore to its bankers, received bids from Tata Steel, JSW Steel and Liberty House in February, but the resolution process is currently on hold because of a disagreement over the eligibility of the bids. While the bids of Tata Steel and JSW Steel were received on February 8, which was the resolution professional’s (RP) deadline for accepting bids, the resolution plan by Liberty House was received after the deadline. Following the RP not taking its bid into consideration on this ground, Liberty House challenged the RP’s decision at the National Company Law Tribunal (NCLT).
“There will be a rebid for Bhushan Power and Steel since it is the most logical solution to end the issue,” a senior banker with direct knowledge of the development said on condition of anonymity. “We are hopeful that a second round of bidding will lead to a better price discovery,” he added. The NCLT is likely to pass its judgment on Liberty House’s plea in the current week, sources close to the company said. The RP for Bhushan Power and Steel, Mahender Kumar Khandelwal, said, “A decision will be taken after the NCLT judgment.” An official spokesperson for Liberty House declined to comment on the issue since the matter is sub judice.
Legal experts have differed in their interpretation of the Insolvency and Bankruptcy Code, 2016 (IBC), on the issue of eligibility of bids received after the RP’s deadline. However, many bankers and lawyers are of the opinion that if such bids add significant value, they should be considered. “There is no specific section under the code which would restrict the powers of the resolution professional from accepting a bid which has been received after the deadline that has been set. The Supreme Court has held in one matter that timelines prescribed under the code, being procedural, are not mandatory,” said Vishal Gandhi, founder, Gandhi & Associates.
According to information received by FE, the fair value of Bhushan Power and Steel has been pegged at close to Rs 25,000 crore. The firm’s liquidation value is estimated to be in the range of Rs 10,000-12,000 crore. The list of claims from Bhushan Power and Steel’s financial creditors show that as on March 9, the company owed its financial creditors Rs 47,265 crore. It owed State Bank of India Rs 9,834 crore and Punjab National Bank Rs 4,423 crore. Some of the other creditors include Bank of Baroda, Bank of India and Canara Bank. The company’s website states it is a fully integrated 3.5 million tonnes per annum steelmaker.