The Indian government has discussed with banks the Supreme Court verdict that scrapped JSW Steel Limited’s acquisition of Bhushan Power and Steel Limited (BPSL) though an illegal bankruptcy resolution process and the government is finalising a response, the secretary to the department of financial services (DFS) under the ministry of finance said in a statement on Tuesday, May 6.
“I have already reviewed the order with all the lenders. We have taken a position, we have studied the judgement, we have got our advocates' view on the judgment,” M Nagaraju, DFS secretary, said.
"Now we are taking a view in the government on how we approach the judgment. We will finalise soon,” he said.
JSW Steel is likely to take a hit of 10-15 percent on production and around 10 percent on earnings before interest, tax, depreciation and amortisation if subsidiary BPSL heads to liquidation, as directed by the Supreme Court, analysts said.
JSW Steel acquired Bhushan Power & Steel out of bankruptcy in 2019 making it its large acquisition.
JSW Steel had emerged as the successful resolution applicant offering over $2.26 billion to financial creditors. The plan was approved by the National Company Law Tribunal (NCLT) in September 2019 and subsequently upheld by the National Company Law Appellate Tribunal (NCLAT), despite ongoing legal challenges, including objections raised by the Enforcement Directorate alleging money laundering.
BPSL had been admitted for corporate insolvency resolution in 2017. At the time, the company owed over $5.58 billion (at current exchange rate) to financial creditors and more than $92 million to operational creditors.