Supreme Court Rejects JSW Steel’s Resolution Plan; Orders Liquidation of Bhushan Power and Steel

The Apex court today, May 2 went ahead to initiate the liquidation of Bhushan Power and Steel Ltd (BPSL), rejecting JSW Steel’s resolution plan for the bankrupt company.

The Supreme Court highlighted that the ₹19,700-crore resolution plan was illegal and violates the provisions of the Insolvency and Bankruptcy Code (IBC).

It held that the resolution plan should not have been cleared by the Committee of Creditors (CoC), while invoking its extraordinary powers under Article 142 of the Constitution to direct BPSL’s liquidation. However, a detailed order is awaited.

Previously, JSW Steel offered to pay ₹19,350 crore to financial creditors (includes a 60% haircut) and ₹350 crore to operational creditors against their admitted claims of ₹733 crore.

Notably, the Reserve Bank of India (RBI) in 2017 identified BPSL among the 12 large non-performing assets (NPAs) under IBC. At the time, it owed more than ₹47,000 crore to lenders and over ₹780 crore to operational creditors. Reversing the deal (the ₹19,700 crore resolution plan), would significantly impact the financials of major banks, including the State Bank of India and Punjab National Bank, who were leading members of the Committee of Creditors (CoC) involved in this case.