The National Company Law Appellate Tribunal (NCLAT) has turned down a plea by Tata SteelNSE -0.64 % to consider its bid for bankrupt Bhushan Power and Steel as the only legitimate bid for the company at a ruling on Monday.
Justice SJ Mukhopadhaya ruled that Tata’s plea was “premature” and “unmaintainable” and upheld the right of the committee of creditors to update, amend, modify or annul resolution plans with respect to conditions outlined in a process document.
The judgment is significant as it clears the air on the controversial issue of the sanctity of belated bids for bankrupt companies.
The Tatas had approached NCLAT on the grounds that UK’s Liberty House, a suitor that submitted a belated bid for Bhushan Power and Steel, should be disqualified from the bidding process because it did not adhere to the guidelines laid out in the process document.
Tata submitted its offer well within the deadline of February 8 last year for submission of financial bids for Bhushan Power and Steel, a company that was among RBI’s first list of 12 troubled accounts that were submitted for proceedings under the new bankruptcy laws.
Its offer was the highest at the time it was submitted.
The NCLAT order has come as a major shot in the arm for JSW Steel, which was the only bidder to submit a revised offer for the company in July last year. JSW Steel submitted an offer of Rs 19,300 crore at the time, beating previous offers from Liberty House and Tata Steel, both of which chose to stick to their original bids.
Sources said the BPSL resolution professional may issue a Letter of Intent (LoI) to JSW Steel within a week or a fortnight. However, a lot would depend on whether the Tatas decided to appeal at the Supreme Court.
Commenting on the development, JSW Steel group CFO Seshagiri Rao said: “We would have to wait and watch and see how the CoC reacts. Even in the NCLT, after resolution plan is submitted, we have to keep our fingers crossed as to outcome of various litigations that may come.”
If JSW Steel manages to acquire BPSL successfully, it will be its first major acquisition at the NCLT-led auction for stressed steel assets. While it bagged the 1 million tonne (MT) Monnet Ispat for Rs 2,875 crore jointly with Aion Investments, BPSL with a 3.5 MT capacity, is a bigger play. It would also compensate for the setback suffered by JSW Steel when it failed to grab Bhushan SteelNSE -0.88 %, losing out in the race to the Tatas who acquired it for Rs 35,200 crore.
The appellate bankruptcy court directed the resolution professional, Mahender Khandelwal, who is tasked with administering the company, to submit the best proposal to the National Company Law Tribunal for its approval.
Bhushan Power and Steel’s promoter Sanjay Singal has unveiled a surprise last minute bid for the company, ET reported on Monday, that promises to pay off the creditors entirely leading to recovery of all their dues. Singal has offered to convert the entire debt of the company into redeemable preference shares that can be redeemed from the beginning of next year.
Source: Economic Times