NCLT approves Tata Steel’s resolution plan
NEW DELHI: The National Company Law Tribunal (NCLT) on Tuesday approved the resolution plan of Tata Steel Ltd for debt-ridden Bhushan Steel Ltd under the Insolvency and Bankruptcy Code (IBC).
Bhushan Steel’s admitted financial debt was ₹56,051.16 crore as on February 1. It is one of the 12 non-performing asset accounts notified by the RBI last year.
While approving Tata Steel’s resolution plan, NCLT dismissed a plea by Bhushan Steel Employees Union opposing the plan on the grounds that it violates section 29A of IBC, and imposed a cost of Rs1 lakh on it.
The tribunal also dismissed a plea moved by engineering firm Larsen and Toubro Ltd (L&T), one of the operational creditors of Bhushan Steel, seeking a higher priority in the recovery of dues of over ₹900 crore as a secured creditor, and ordered it to pay ₹1 lakh as fine.
NCLT rejected Bhushan Energy’s petition to ensure continuance of its power purchase agreement with Bhushan Steel, which is proposed to be terminated under Tata Steel’s resolution plan.
Tata Steel has offered an upfront payment of ₹35,200 crore to lenders, along with a 12.27% stake in the debt-laden steel maker, as part of its resolution plan. The plan was approved by the committee of creditors for Bhushan Steel with a 99.8% majority vote after testing its “commercial viability and feasibility”.
Under the plan, Tata Steel proposes to pay salary arrears due to the employees of Bhushan Steel and ensure the continuation of their employment. The resolution plan intends to pay back Bhushan Steel’s operational creditors to the extent of ₹1,000 crore and another ₹200 crore on a pro rata basis spread over a year, depending on “vitality to run the business”.
The other resolution applicants in the insolvency process were employees of Bhushan Steel and JSW Steel. A copy of the judgement is awaited.