The Supreme Court on Friday held JSW Steel Ltd's acquisition of Bhushan Power & Steel Ltd as illegal and ordered the liquidation of the beleaguered steelmaker.
In an order, the apex court ordered that the resolution plan submitted by JSW Steel in 2019 be rejected. JSW Steel had won the bid to acquire Bhushan Power & Steel under the insolvency and bankruptcy code for a little less than Rs 20,000 crore. It had beaten Tata Group and UK-based Liberty Group to win the asset. The acquisition was later concluded in 2021.
At the time, this was the second largest acquisition under the IBC.
Bhushan Power & Steel was one of the 12 companies shortlisted by the Reserve Bank of India in 2017 for insolvency proceedings. Bhushan Power owed its lenders more than Rs 47,000 crore and over Rs 780 crore to operational creditors at the time.
The unwinding of the insolvency transaction will likely hit major banks including State Bank of India and Punjab National Bank, which led the committee of creditors in the Bhushan Power case.
The resolution proceedings faced inordinate delays, first due to promoter Sanjay Singhal, who proposed to buy out the company, and then later due to investigations by the Enforcement Directorate.
In December 2024, the Supreme Court had ordered ED to restitute over Rs 4,000 crore worth of assets the agency had attached as part of its investigations. The agency had temporarily attached the assets in 2019 under the Prevention of Money Laundering Act (PMLA) because the former management was under investigation for an alleged bank loan fraud.
ED had also argued that JSW Steel is a related party, as it held a minority stake in a separate company alongside Bhushan Power.
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