Bhushan Power Insolvency: Enforcement Directorate Restitutes Properties Worth Rs 4,000 Crore To JSW Steel
The assets were provisionally attached by the ED as the erstwhile management was facing a probe connected with an alleged bank loan fraud.
The Enforcement Directorate has restituted assets worth Rs 4,025 crore to JSW Steel Ltd., the successful resolution applicant of Bhushan Power and Steel Ltd.
This move follows the top court's directive in the Bhushan Power & Steel insolvency case, which was pending before the court for nearly four years.
The Enforcement Directorate 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.
The top court has stated that it has not expressed any views on ED's power to attach the properties of debtors who are undergoing the insolvency resolution process and has kept this issue open.
JSW Steel’s resolution plan for Bhushan Power & Steel was approved by the National Company Law Tribunal in September 2019.
But a month later, the Enforcement Directorate attached Bhushan Power’s assets worth Rs 4,000 crore.
This jeopardised the insolvency resolution until December 2019, when the central government amended the Insolvency and Bankruptcy Code to provide that criminal proceedings against former promoters will not affect a resolution applicant when acquiring a stressed firm.
The National Company Law Appellate Tribunal in February 2020 vacated the attachment of Bhushan Power’s assets and approved JSW Steel’s bid for the company. But the Enforcement Directorate moved the top court to argue that the IBC amendment should not apply to this case.
While the matter is still pending, JSW Steel has been relying on an apex court verdict in a separate case (Manish Kumar v/s Union of India) where it upheld the constitutional validity of the Section 32A of the IBC, saying new owners can’t be held liable for actions of the previous management.
Bhushan Power was part of the first list of 12 companies that the Reserve Bank of India identified for immediate referral for bankruptcy proceedings in 2017.
Notably, JSW Steel had implemented the resolution plan back in March 2021 which included a repayment of Rs 19,350 crore to the financial creditors of Bhushan Power.
