The Supreme Court has set aside the resolutino plan of JSW for the revival of Bhushan Power and Steel. The order has created a furore amongst banks, financial institutions, lawyers, and insolvency professionals, Ramakant Rai, partner, and Ravin Kapur, counsel, Trilegal, write
Courtesy: Freepik
The Supreme Court has set aside the resolution plan of JSW for the revival of Bhushan Power and Steel. The order has created a furore amongst banks, financial institutions, lawyers, and insolvency professionals. The Supreme Court has noted serious non-compliances or deviations by the Resolution Professional (RP), Committee of Creditors (CoC), and the successful resolution applicant. These non-compliances are discussed in brief below, and thereafter, we have discussed the wider implications of this order.
The Supreme Court has highlighted the failure of the RP to continue with the process despite the lapse of timelines provided in the Insolvency and Bankruptcy Code (IBC). Further, it has also highlighted a failure on the part of the RP to conduct a Section 29A check (i.e., disqualification of JSW on account of default concerning any other group/affiliated company of JSW).
While JSW may or may not have been disqualified under Section 29A, these lapses on the part of the RP appear to be of a serious nature, specifically the one concerning Section 29A, as Section 29A is one of the most important qualification criteria for bidders under the IBC.
The SC also highlighted concerns with regard to the conduct of the CoC and the contradictory stance adopted by it in the context of demand for interest on account of the delay in the implementation of the plan. According to the Supreme Court order, it appears that the CoC was seeking interest payment from JSW initially for the delay in the implementation of the plan, and this contention was subsequently dropped by the CoC.
While we are not in a position to comment on the specific facts, we would like to submit that such pressure tactics as demand for interest on account of delayed implementation are often used, as it is a useful tool to ensure timely resolution in IBC cases.
(This story appears in the 14 May, 2025 issue of Forbes India. To visit our Archives, click here.)