On Friday, the Supreme Court dismissed the resolution plan submitted by JSW Steel for Bhushan Power and Steel Ltd. (BPSL), calling the plan illegal and declaring that it should not have been approved by the Committee of Creditors (CoC). The Court has further ordered the liquidation of BPSL.
JSW Steel had earlier proposed a payment of ₹19,350 crore to BPSL's financial creditors as part of its resolution plan. However, this offer represented a near 60% reduction (haircut) for the lenders. In addition, the resolution plan included an offer of ₹350 crore to operational creditors, against their admitted claims of ₹733 crore.
The legal proceedings surrounding BPSL are complicated, with the company’s former promoters under investigation for the diversion of ₹4,025 crore in bank funds. In October 2019, the Enforcement Directorate (ED) provisionally attached assets worth over ₹4,025 crore of BPSL under the Prevention of Money Laundering Act (PMLA), citing the diversion of funds by the previous management before the insolvency proceedings commenced. The attached assets were deemed proceeds of crime under Section 2(1)(u) of the PMLA.
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