NCLAT declines to stay TataBhushan Steel deal
LEGAL TANGLE Notices issued to Tata Steel, resolution professional, creditors NEW DELHI:
The National Company Law Appellate Tribunal (NCLAT) on Monday refused to grant an interim stay in the acquisition of Bhushan Steel Ltd by Tata Steel Ltd.
“Let us decide the law, but not stall the process,” a bench headed by justice S J Mukhopadhyay said.
The appellate tribunal was hearing an appeal by former managing director and promoter of Bhushan Steel, Neeraj Singal challenging an order of the National Company Law Tribunal (NCLT) approving Tata Steel’s resolution plan for the debt-ridden company. It was, however, clarified that the acquisition process would be subject to the final outcome of the appeal. The bench issued notice to the resolution professional, committee of creditors and Tata Steel, asking them to file their replies within seven days.
The bench also asked Tata Steel to enclose the relevant portion of its resolution plan for Bhushan Steel, disclosing the proposals for financial creditors, operational creditors, secured & unsecured creditors as well as shareholders and submit an estimated deadline for the execution of its resolution.
A notice was also issued to two more parties—Bhushan Steel Employees Union and L&T—that had raised objections against the resolution plan submitted by Tata Steel before the NCLT.
Counsel appearing for Singal, U K Chaudhary argued that Tata Steel was ineligible to bid in view of Section 29A of the IBC.
Chaudhary further sought setting aside of the resolution process for Bhushan Steel arguing it was “illegal”.
L&T which has a claim of over ₹900 crore against the steel manufacturer has moved a separate appeal against the approval granted to Tata Steel’s resolution plan, saying that it is oppressive against operational creditors.
The NCLT’s principal bench on May 15 approved Tata Steel’s resolution plan promising an upfront payment of ₹35,200 crore to lenders, along with a 12.27% stake in the steel maker.
Pursuant to the order, Tata Steel has reportedly acquired a controlling stake of 72.65% in Bhushan Steel for around ₹36,400 crore. The appeal will be next heard on May 30.
The acquisition of debt-laden Bhushan Steel, under the Insolvency and Bankruptcy Code (IBC) framework, will reduce bad loans of public sector banks (PSBs) by ₹35,000 crore, financial services secretary Rajiv Kumar said Monday.
“IBC transforming credit culture in NewIndia. About ₹35,000 crore reduction of NPAs of PSBs in Bhushan Steel case. Reduction of NPAs in individual PSBs range from about ₹500 crore to over ₹10,000 crore, he tweeted.
Last week, Tata Steel, through its subsidiary, completed the acquisition of controlling stake of 72.65% in Bhushan Steel for around ₹36,400 crore after emerging as the winning bidder in an insolvency auction. Kumar said following the Bhusan Steel buyout, PSBs will write back ₹7,500 crore of loans which were earlier classified as NPAs.
NEWDELHI: