Resolution plan: Lenders to Bhushan Power ask JSW Steel to pay up

Published: June 26, 2020 2:15 AM

The letter reads: “If the resolution plan is not implemented within 2 weeks of this letter we shall take steps, including but not limited to Section 74 of insolvency & bankruptcy code (IBC).”

JSW Steel had earlier missed the deadline of March 17 to make the payment of Rs 19,350 crore as per approval from National Company Law Appellate Tribunal (NCLAT).JSW Steel had earlier missed the deadline of March 17 to make the payment of Rs 19,350 crore as per approval from National Company Law Appellate Tribunal (NCLAT).

By Ankur Mishra

Lenders to Bhushan Power and Steel have intimated to JSW Steel that they would take “appropriate steps” if it does not implement the resolution plan for BPSL in two weeks, among them the invoking of guarantees. A letter dated June 20 was sent to JSW Steel as the company is yet to pay the `19,350 crore, as per the court-approved resolution plan, persons close to the development told FE.

The letter reads: “If the resolution plan is not implemented within 2 weeks of this letter we shall take steps, including but not limited to Section 74 of insolvency & bankruptcy code (IBC).”

JSW Steel had earlier missed the deadline of March 17 to make the payment of Rs 19,350 crore as per approval from National Company Law Appellate Tribunal (NCLAT).

Sonam Chandwani, managing partner KS Legal and Associates, said: “According to section 74 of IBC, the CoC could move to penalise officials of the corporate debtor seeking for their imprisonment and/or payment of a hefty amount.”

“The penalty amount could be to the tune of Rs 3 crore along with imprisonment not extending 5 years,” she further said.

Responding to an email sent by FE, JSW Steel official said, “The matter is subjudice before the SC as all the parties in the last hearing were asked to file their submissions within two weeks in response to application filed by JSW Steel. Pending adjudication of appeals and CoC application before SC, the plan is incapable of implementation more so when the assets of BPSL are continued to be attached by enforcement directorate (ED).”

The letter said: “We have been assured by you time and again in various meetings that the debt financing for the implementation of the resolution plan is close to completion; however, even at this late stage, we note that no binding executed loan documents have been provided to us which would evidence such debt financing, and now we believe that no such debt financing agreements have actually been signed as of date, and therefore JSW has not completed the funding agreements for implementation of the resolution plan, and is not in a situation to draw down funds.”

While the NCLAT has provided JSW Steel immunity from the Enforcement Directorate on various charges pertaining to the former promoters, the Singhals have challenged the order in the Supreme Court. The SC has not stayed the resolution plan but has told the CoC that if JSW makes the payment but loses the case, the lenders should return the money. NCLAT had earlier approved JSW Steel’s bid for acquisition of troubled BPSL. However, the erstwhile promoter of the company, Sanjay Singhal, had moved the Supreme Court against NCLAT’s approval of the BPSL resolution plan. The apex court refused to stay the resolution plan, but admitted the plea against BPSL resolution. In the last hearing on June 10, the SC adjourned the matter till July 6 and directed parties involved in the BPSL insolvency case to file additional documents and affidavit within two weeks.

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