No meetings on resolution plans, tribunal tells Bhushan Power
The National Company Law Tribunal (NCLT) has prohibited the committee of creditors from holding a meeting on a resolution plan for Bhushan Power till the tribunal decides on the petition filed by United Kingdom-based Liberty House. The committee was supposed to hold the meeting on Wednesday.
The Delhi bench of the NCLT said any such meeting could be prejudicial against Liberty House. The committee of creditors rejected Liberty House’s bid for Bhushan Power as it had been submitted after the February 8 deadline. This has left Tata Steel and JSW Steel in the race. Liberty House has moved the NCLT against the committee's decision.
Justice MM Kumar said the creditors had time till April to final is ea plan. The tribunal stated that the creditors did not have to hurry to final is ea plan as the 270-day moratorium period would end in April. The creditors and the interim resolution profession al’ s counsels said they did not have the choice of accepting Liberty House’s bid yet. Bhushan Power & Steel owe around ~450 billion to lenders.
The counsel opposing Liberty House had argued that not only the bid was placed after the deadline but also that the bidder had not complied with the submission obligations set by the resolution professional.
Tata Steel seems to be emerging the highest bidder for Bhushan Power and Steel. According to sources, Tata Steel has offered to pay ~170 billion to creditors against JSW’s ~110 billion. The final bids were placed on February 9 and sent to the legal team for scrutiny.
Around 13 firms had submitted expressions of interest. Only five were provided access to the virtual data room. The liquidation value of Bhushan Power was estimated around ~90 billion and the fair value around ~250 billion. Bhushan Power was one of the few companies where lenders had pressed for a fair value before the insolvency regulator made it mandatory. The committee of creditors is likely to be guided by an average of the liquidation value and the fair value.
The company’s debt stood at ~372 billion in 2015-16. Net sales were around ~77 billion and losses around ~24.36 billion. The dues had risen to ~470 billion when it filed for insolvency. Apart from JSW and Tata Steel, Anil Agarwal’s Vedanta had conducted due diligence of the plant. However, it stayed away from submitting a bid. AION Capital had shown an interest but did not submit a bid.
Bhushan Power ran into trouble after its iron ore and coal mining licences were cancelled. It was allocated a coal mine with reserves of 250 million tonnes, which was deallocated in 2014.