The State Bank of India (SBI) has moved a plea in the National Company Law Tribunal (NCLT) seeking to initiate insolvency proceedings against Sanjay Singal and Aarti Singal, the erstwhile promoters of Bhushan Power and Steel (BPSL).
Both were personal guarantors for a loan amounting to Rs 12,276 crore provided to the steel firm through various facilities from time to time starting June 2009. Of the total outstanding debt, Rs 9,648 crore was term loan and the remaining was a working capital loan, but the steelmaker defaulted on paying back, SBI said in its application.
Bishwajit Dubey, partner Cyril Amarchand Mangaldas, appeared for SBI in the NCLT’s principal bench in New Delhi on Tuesday. NCLT has issued notice to the Singals. SBI has nominated Reshma Mittal to be the resolution professional in the resolution process.
In its application, SBI said loans were provided by the bank along with its now-amalgamated subsidiaries State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore. Subsidiaries have been amalgamated into SBI with effect from April 1, 2017.
JSW Steel closed the acquisition of BPSL for Rs 19,350 crore in March this year.
The Centre had on November 15, 2019, notified rules holding corporate guarantors also liable for loans obtained by their companies, which later failed to pay up and went into resolution proceedings under the IBC.
Later in May 2021, the Supreme Court had said that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of his or her liabilities under the contract of guarantee.
Source: Financial Express