DNA: RBI withstands pressure, rules out changes in one-day NPA recognition norms

7 February 2019: Despite incessant demand from a section in the finance ministry, corporates, as well as banks for some leniency in the February 12, 2018 circular that radically changed the bad loan recognitions norms, the Reserve Bank governor Shaktikanta Das Thursday ruled out any changes in the same.

In their recent meetings with the governor, bankers and industry players had requested some easing in the one-day default norm announced in the February 12 circular, which has massively shot up the quantum of dud loans in the system to 11.5 percent of the system. In fact, it can be recalled that, one of the dozen demands in the three letters that the finance ministry shot off to RBI in October was also a changes in the new NPA recognition norms. And this along with other demands, led to a serious public spar between the government and RBI and finally resulted in the sudden resignation of the then governor Urjit Patel on December 11, 2018.

“At the moment, there is no proposal to modify the February 12 circular,” Das told reporters at the customary post-policy conference. The February 12 circular aims at quick reporting of defaults, resolution plan for defaulting companies and a time-bound referral of defaulting companies to the National Company Law Tribunal (NCLT) and makes it mandatory to map an account as NPA even on a single-day default.

Under the framework, bankers will have to implement a resolution plan to revive a defaulting company within 180 days. If the plan is not implemented within the stipulated time, the account will have to be referred to NCLT for resolution as per the Insolvency and Bankruptcy Code.

Stressed power sector companies had challenged the February 12 circular in the Allahabad High Court. The court had asked RBI to look at an option to exclude them from the one-day default or offer some special dispensation. These companies alone owe more than Rs 3 lakh crore to the system. But most of the stress is due to external issues like lack of fuel supply linkage after the apex court had cancelled hundreds of coal mines. The RBI not only ruled out any changes but had also challenged the High Court decision in the Supreme Court where the matter is pending now.

When asked whether Project Saskhat, which is aimed at resolving stressed assets before going to the IBC, is delaying implantation of the February 12 cases, deputy governor MK Jain answered in the negative.”…Not at all. The February 12 circular talks of a 180-day timeline whereas Project Sashkat only looks at how to ensure that the process during the 180-day timeline is efficient,” Jain said.

DNA reported

BQ: Ruias Face Another Setback As Essar Power Lenders Move To Invoke Guarantees

7 February 2019: The Ruia family, mounting one legal battle after another to thwart Essar Steel Ltd.’s insolvency resolution, faces a fresh setback.

Lenders to the Essar Group’s power companies have filed recovery cases to invoke personal guarantees provided by the promoters, two people aware of the development told BloombergQuint. Private lender ICICI Bank Ltd., and state-run IDBI Bank Ltd. moved various benches of the debt recovery tribunal, the people said without willing to be identified as they are not authorised to speak to the media.

Essar Power Mahan

ICICI Bank Ltd. is fighting a case at the Delhi bench of the DRT, trying to recover personal guarantees offered against loans to Essar Power Mahan Ltd., which has set up a 1,200-megawatt capacity plant at Singrauli district, Madhya Pradesh. The loans, and consequently the guarantees, were to purchase and develop a coal mine which has since then been returned to the government pursuant to a Supreme Court order on allocation of coal mines.

The personal guarantees could run up to Rs 260 crore, the first person quoted above said requesting anonymity. The Delhi bench fined the Ruias since they did not provide their personal financial details on time. It also ordered the promoters of Essar Group to pay their dues and asked Prashant Ruia to inform lenders each time he travelled out of the country, the person said.

In an emailed response, the Essar Group stated that a court order prevented the promoter guarantee from being encashed. And that they had sought directions from the Delhi High Court for return of money paid towards the mine.

“By an order dated 03.11.2017, the Hon’ble Delhi High Court has, inter alia, directed the Union of India that no coercive steps shall be taken, which means that the bank guarantee of ICICI Bank cannot be encashed. The said order is now in force,” an Essar Group spokesperson said.

“In the circumstances, the question of enforcing personal guarantee given by Mr. Prashant Ruia does not arise at all,” the statement read.

BloombergQuint’s perusal of the Delhi High Court orders shows that it was in fact the union government that promised not to take coercive action, till the duration of the case. According to documents available on the high court’s website, on three separate occasions, Nov. 3, 2017, Nov. 7, 2017 and on Dec. 6, 2017, the government told the court that it would not initiate any such action for the time being.

On Nov. 29, 2018, the high court finished hearing all arguments and has since reserved its order. So it’s not clear how long the promoter guarantees will remain un-encashed.

Essar Power Gujarat

Last month, IDBI Bank filed a recovery petition against the Ruias at the Ahmedabad bench of the debt recovery tribunal, seeking to recover personal guarantees worth Rs 50-60 crore in Essar Power Gujarat, the second person spoke on condition of anonymity. Lenders led by State Bank of India are also in the process of filing for recovery proceedings against Essar Energy U.K. to invoke corporate guarantees provided by the company for loans to Essar Power Gujarat, the person said.

While seeking a no-objection certificate from lenders during the Essar Oil sale in 2015-16, Ruias had agreed to provide personal guarantees for Essar Power Gujarat and had promised to repay the dues in the event of a default, the second person quoted earlier said.

In the statement to BloombergQuint, the Essar Group spokesperson said that the Gujarat state government had formed a high powered committee for revival of stressed power projects. The committee has made a recommendation to restructure the debt of these stressed companies, which the state government has accepted, the spokesperson said.

“In view of the above, it is obligatory for the banks to restructure the debts of the stressed three (3) imported coal based power assets, which include Essar Power Gujarat Limited. The lenders, therefore, are unlikely to take any coercive steps against the concerned power producers,” the spokesperson said.

While a high powered committee has suggested restructuring of loans in its report, a banker in the know told BloombergQuint that so far there has been no progress on it.

SBI, IDBI Bank and ICICI Bank have yet to respond to BloombergQuint’s emailed queries.

Essar Steel

The lending consortium to Essar Steel had already filed a case at the Ahmedabad bench of the DRT, invoking guarantees worth Rs 11,500 crore offered by Prashant Ruia and his uncle Ravi Ruia, the first person cited earlier said.

The scale of personal guarantees being invoked are important at a time when the Ruias and Essar Group are trying to wrestle back the ownership of Essar Steel, which is close to be sold to ArcelorMittal, after a long drawn and highly litigated insolvency process.

While there is a moratorium on filing legal proceedings against a company under the Insolvency and Bankruptcy Code, 2016, it does not extend to guarantors of the firms. Lenders are free to move against these guarantors to recover their dues.

Bloomberg Quint reported

FE: Q3 Results: JSW Steel profit falls 10% to Rs 1,603 crore on higher interest cost

7 February 2019: JSW Steel on Wednesday reported a 10% year-on-year drop in its consolidated net profit for the October-December quarter at Rs 1,603 crore after the steel producer incorporated the financials of companies acquired in US and Italy during the financial year. The finance cost rose by 10.61% on year to Rs 1,061 crore, while depreciation and amortisation for the December quarter was up by 26.5% on year to Rs 1,078 crore.

“The interest and depreciation from acquisitions made in Italy and US have impacted the financials at the consolidated net profit level. The Ebitda has, however, gone up by 16.9% during the quarter to Rs 4,501 crore,” Sheshagiri Rao, joint MD and group CFO, told reporters.

The steel company’s subsidiaries, JSW Steel USA Ohio reported an Ebitda loss of $10.55 million in the December quarter, while JSW Steel (Italy) Srl Aferpi, reported an operating loss of €7.36 million for the December quarter.
JSW Steel’s operating margins improved by 107 basis points to 22.15% in the December quarter as the realisations on per tonne basis improved on long-term contracts, Rao said.

The realisations were further aided by selling more in the domestic market, and a better product mix, Rao added. The consolidated Ebitda/tonne in the December quarter rose 29.63% on year to Rs 12,441 from Rs 9,597 a year ago. However, the cost of raw material consumed during the quarter was up at Rs 11,611 crore compared with Rs 9,695 crore a year ago.

JSW Steel’s consolidated crude steel production during the quarter increased by 3% on year to 4.23 million tonne aided by higher capacity utilisation at both Vijayanagar and Dolvi. “With nine months production at 74.7% of FY19 guidance, the company is on track to achieve the crude steel production guidance of 16.75 mtpa for FY19,” Rao said.
The demand in domestic market during the December quarter was firm and the company focused on increasing the sales in domestic market leading to 15% year-on-year increase in domestic sales. However, exports during the quarter dropped 70% on year led by muted demand and weak pricing.

Overall, the steel sales volume dropped 7% on year to 3.68 million tonne during the quarter, while saleable steel sales fell 10% on year to 3.62 million tonne. The steel producer may fall short of its FY19 sales volume guidance of 16 mtpa by 2-3% as it is unlikely to recoup the lost volumes in the fourth quarter.

However, the company believes the steel prices will improve globally on account of increase in input costs, which may help the company to reduce its inventory in the March quarter. “The steel prices across geographies have already increased by $40/tonne in the January-March quarter of 2019,” Rao said.

As on December 31, the net debt rose to Rs 46,000 crore from Rs 44,800 crore in September on account of higher inventory cost. Net debt to equity was lower at 1.40 times at the end of Q3FY19 against 1.46 time at the end of Q2FY19. The company is waiting to receive the letter of intent from the CoC of Bhushan Power and Steel, which was taken to NCLT for insolvency proceedings.

The Financial Express reported

Mondaq: The Supreme Court Of India’s Rejection Of The Challenge To The Constitutional Validity Of The Insolvency And Bankruptcy Code, 2016

7 February 2019: The Supreme Court in Swiss Ribbons Pvt. Ltd. vs. Union of India and Ors. (“Swiss Ribbons”)1, rejected the multi-pronged challenge on the constitutional validity of the Insolvency and Bankruptcy Code, 2016 (the “Code”), while consciously harmonizing the legislative intent with the expanse of judicial restraint.

This article aims to elucidate the basis of the challenge and breakdown the rationale behind the Supreme Court’s rejection, while emphasising on the key takeaways.


The Supreme Court in Madras Bar Association v. Union of India, 2 had considered various issues in relation to the constitution of the National Company Law Tribunal (“NCLT”), qualification of the technical members and constitution of the Selection Committee. Upon noticing glaring defects, it laid down several remedial measures for compliance by the Union of India. In this background, it was argued in Swiss Ribbons that Section 412(2) of the Companies Act, 2013 continued to linger in the statute and therefore there was a likelihood of the two Judicial Members of the Selection Committee to be outweighed by the three bureaucrats. However, the Supreme Court while observing that Section 412 had already been amended on 03.01.2018 by the Companies Amendment Act, 2017 to remedy this issue, appeared to be swayed by the affidavit filed by the Ministry of Corporate Affairs, which clarified in no uncertain terms that the Selection Committee was constituted to make appointments of members of the NCLT in the year 2015 itself, in compliance with the judgments of the Supreme Court.


It was averred that as the National Company Law Appellate Tribunal (“NCLAT”) only had a seat in New Delhi, it would be unreasonable and obstructive to expect litigants to travel in order to exercise their right of appeal. A similar view had been taken by the Supreme Court in the context of the National Tax Tribunal Act 20053, wherein directions were issued to setup circuit benches so as to neutralise the hardship to litigants. The Union of India was in agreement with the Petitioners and undertook to establish circuit benches. The Supreme Court noted the said undertaking and proceeded to issued directions for establishment of Circuit NCLAT Benches, within a period of 6 months.


The Supreme Court in Madras Bar Association4 had categorically held that the administrative support for all Tribunals should be from the Ministry of Law and Justice and that the Tribunals and members should not be provided with facilities from the parent ministries or departments concerned. Despite the same, it was brought to the notice of the Supreme Court that the NCLT and NCLAT were accessing support from the Ministry of Corporate Affairs. The Supreme Court on noticing that the Union of India had not acted in terms of the said directions since 2010, urged them to act swiftly and comply with the same “in letter and spirit.”


The Petitioners contended that there is no intelligible differentia between financial creditors and operational creditors in so far as the object of the Code is concerned. Despite that, the Code treated both classes of creditors differently.

  1. While an operational debtor is given a notice of default and can dispute the genuineness of the claim, a financial debtor is neither entitled to a notice nor to dispute the claim of the financial creditor.
  2. operational creditors have no place in the committee of creditors unless they amount to 10% of the aggregate amount of debt owed.
  3. Nevertheless, in terms of Section 21 and 24 of the Code the operational creditors are not entitled to vote in the committee of creditors.

Hence, in terms of Shayara Bano v. Union of India,5 such classification is discriminatory and manifestly arbitrary.

However, the Supreme Court upheld the distinction between the two classes of creditors after analyzing the nature of their respective debts, financial competence and extent of evidence needed to trigger the insolvency resolution proceedings under the Code. The Supreme Court held that the difference between the two classes of creditors is not only justified but also beneficial and considered, owing to the fact that (1) the operational debts are typically unsecured and smaller, while financial debts are secured and larger; (2) the nature of loan agreements with financial creditors are different from contracts with operational creditors for supplying goods and services; (3) the possibility of disputed operational debts are relatively higher than financial debts; (4) an event of default is far easier to establish and verify for financial creditors as electronic records of the financial creditors are usually filed in the Information Utilities; and (5) financial creditors are better equipped to engage in restructuring of loans as well as reorganization of the corporate debtor’s business considering the fact that they are involved in assessing the viability of the corporate debtors from the start.

Since the financial creditors are usually banks and financial institutions, they are best equipped to assess viability and feasibility of the business of the corporate debtor. Most of them carry out techno-economic valuations and financial projections at the time of granting the loans. On the other hand, operational creditors, are primarily interested in recovery and are neither concerned with nor equipped to assess viability and feasibility of a business.  Nevertheless, the check and balances are already in place as a resolution plan cannot pass muster under Section 30(2)(b) read with Section 31 unless a minimum payment is made to operational creditors, being not less than the liquidation value.

The Supreme Court also clarified that the notice to a financial debtor is unnecessary considering the debtors are usually aware of the loan structure and the defaults made. On the other hand, the notice of default in case of an operational debt will not only prevent premature initiations but will also facilitate negotiations and settlements between the parties.

Additionally, disputes raised by financial debtors are not gone into at the outset because the evidence of financial debts are contained in the documents of information utilities, banks, and financial institutions and set-off and counterclaims by financial debtors are very rare. Nevertheless, financial disputes may be raised at the stage of filing of claims, once the resolution process has commenced. To the contrary, the corporate debtor is served with a copy of the application filed and has the opportunity to file a reply and be heard, before an order is made admitting the said application so as to protect and prevent the corporate debtor from being dragged into the corporate insolvency resolution process malafide. In addition, corporate debtors are not prevented from filing counter claims in other judicial fora.


The Supreme Court recognised the significant change in the trigger mechanism for a financial creditor’s application under the Code. Financial creditors are now only required to establish that the debtor had a financial obligation to pay the debt and failed to do so, as against having to prove that the debtor is unable to pay its debts in terms of the repealed Section 433 (e) of the Companies Act. In this context the Supreme Court accounted for the difference between a “claim”, “debt” and “default” and relied on this difference to justify the reasons that a “financial creditor has to prove default as opposed to an operational creditor who merely claims a right to payment of a liability or obligation in respect of a debt which may be due”.

The four reasons  for the change in approach are (1) predictability and certainty; (2) admission into the insolvency resolution process aims to protect and not prejudice the interests of the corporate debtor; (3)  protecting the economic interests of the corporate debtor is more important than the cause of default; and (4) liquidation is resorted to only in case of failure of the resolution process.


Section 12A of the Code pertaining to the withdrawal mechanism of an admitted application was one of the primary grounds of challenge. It was contended that “Unbridled and uncanalized power is given to the committee of creditors” to reject legitimate settlements and there is a requirement of an approval of at least ninety percent of the voting members of the committee of creditors. In addition, though withdrawal may be permitted prior to admission, there is no provision to permit withdrawal after admission of the application.

The Supreme Court considered these grounds of challenge in the context of the objective of the Code which endorses the participation of all key stakeholder in the negotiation process. It was held that once the resolution process commences, the proceedings are no longer between the applicant creditor and debtor but it is one which involves all creditors. This is solely to prevent settlements to the exclusion of the other creditors. Hence, the high threshold of ninety percent approval. However, it was also clarified that withdrawals would be permissible, in exercise of the inherent powers of the NCLT6,  at any stage where the committee of creditors is not yet constituted.

Nevertheless, the committee of creditors do not have unbridled powers owing to the appeal provision under the Code to the NCLT and thereafter the NCLAT.


The Petitioners also challenged the role of the information utilities under the Code and equated the certificate of the information utility, in so far as it relates to the occurrence of a default to a preliminary decree, which is issued without any hearing or adjudication.

The Supreme Court analysed the Information Utilities Regulations, Regulations 20 and 21 to hold that the evidence is merely prima facie evidence of default, which can be rebutted by the corporate debtor.


The Supreme Court negatived the challenge to the powers of resolution professional, which the Petitioners deemed were quasi-judicial in nature and not merely adjudicatory. It was held, upon relying on the CIRP Regulations7 that the resolution professional is only a “facilitator of the resolution process,” whose administrative functions are subject to the supervision of the committee of creditors and by the Adjudicating Authority. Even when he is required to make a determination, he is only to apply to the Adjudicating Authority for appropriate relief on the basis of the determination. To the contrary, the liquidator has quasi-judicial powers under the Code as he has to consolidate, verify and adjudicate claims


The Petitioners also launched a four-fold challenge on the recently incorporated Section 29-A of the Code which lays down the categories of persons who are ineligible from submitting a resolution plan. Firstly, it was averred that the retrospective application of the provision would impair the vested rights of erstwhile promoters and would lead to multiple litigations and delay of the resolution process. Secondly, a blanket ban on all promoters of the corporate debtors, without incorporating certain exceptions to protect the efficient promoters would be manifestly arbitrary. If an erstwhile promoter proposes a resolution plan that is far better than all the other applicants, then the same should be considered, as maximization of value of assets is a primary objective of the code. Thirdly, it was averred that an account may be classified as a NPA, despite him not being a wilful defaulter and that the period of one year had no basis or rationality. Lastly, relatives of erstwhile promoters are also ineligible under Section 29 A (j), even though they have no business connection with the erstwhile promoters.

The Supreme Court relied upon ArcelorMittal8 to hold that the resolution applicant does not possess a vested right for consideration or approval of its resolution plan and therefore Section 29A isn’t really retrospective as it does not take away any vested right. The Supreme Court also held that it is wholly justified to prevent a person who is unable to service his own debt to participate in the resolution process. Further, the one-year period was also judicious considering the fact that the RBI Master Circulars classify a loan as an NPA only after sufficient grace period is given to the defaulter. Also, during such grace period the said defaulter is permitted to bid with the other resolution applicants to manage the corporate debtor.

In so far as the argument that relatives of erstwhile promoters are also ineligible to participate under Section 29A(j), the Supreme Court held that such a restriction would apply only if the said resolution applicant was connected to the business activity of the resolution applicant.

The exemption of MSME under Section 29A was also not found fault with as the Supreme Court perceived the business of an MSME to attract interest from a promoter of an MSME and may not be of interest to other resolution applicants. Therefore, if MSME’s aren’t exempted then other resolution applicants may not come forward and it would lead to a liquidation of the MSME instead of resolution.


The Petitioners contended that Section 53 is discriminatory and manifestly arbitrary and violative of Article 14 of the Constitution as operational creditors rank below all other creditors, including other unsecured creditors who happen to be financial creditors and are not likely to receive any part of the proceeds of the sale of liquidation assets.

The Supreme Court negatived this challenge on the ground of the relative importance of the two types of debts i.e. financial debts which are secured and operational debts which are unsecured. Recovery of financial debts infuse additional capital into the economy as banks and financial institutions are able to use that money to lend to other entrepreneurs and business entities. This creates sufficient intelligible differentia in order to justify a differential treatment in the distribution of assets. Hence, Article 14 is not attracted.


The continual failures of the Sick Industrial Companies (Special Provisions) Act, 1985, The Recovery of Debts due to Banks and Financial Institutions Act, 1993 and The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 coupled with the underlying-principle that the judiciary ought to maintain sufficient restraint in matters relating to economic regulation, form the backdrop to this decision of the Supreme Court in upholding the constitutional validity of the Code. The Supreme Court was sensitive to the fact that the legislature and the government ought to be permitted to experiment in order to foster change in the economy. A denial of the same by adoption of rigid methodologies by the courts, would not only prevent growth but will also result in adverse and grave consequences to the nation. Economic problems being relatively complex, the Legislature cannot be expected to enact a water tight legislation, which contemplates all possible problems and abuses. Therefore, merely because there may be a possibility of certain inequities, the Supreme Court rightly held that legislation cannot be struck down as unconstitutional.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

As reported on Mondaq

ET: RBI allows cheaper funds for corporate bidders under IBC

7 February 2019: The Reserve Bank of India (RBI) has made a special provision for companies bidding for stressed firms under the insolvency and bankruptcy code (IBC) with a view to make funds cheaper for such companies.

RBI said bidding companies can now raise foreign currency funds through foreign banks abroad and use these proceeds to repay the bank debt for stressed companies which they are looking to buy. In the new external commercial borrowing (ECB) guidelines announced last month, RBI had not permitted foreign funds to repay rupee loans, so this announcement is seen as a special provision to speed up resolution under the IBC.

“The resolution applicants under Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code (IBC), 2016 may find it attractive to borrow abroad to repay the existing lenders. In view of the above, it is proposed to relax the end-use restrictions under the approval route of the ECB framework for resolution applicants under the CIRP and allow them to utilise the ECB proceeds for repayment of rupee term loans of the target company,” RBI said.

However, the only caveat the central bank added was that such loans cannot be availed from overseas branches or subsidiaries of Indian banks. Guidelines in this regard will be issued by the end of February 2019.

The Economic Times reported

THI: Allahabad Bank Q3 net loss narrows to Rs 733 cr

7 February 2019: State-owned Allahabad Bank on Wednesday reported narrowed net loss at Rs 732.81 crore for third quarter ended December of the current financial year due to reduction in bad loan provisions.

The bank had posted a net loss of Rs 1,263.79 crore in the same period of the previous fiscal. Total income was nearly flat at Rs 4,756.88 crore for December quarter of 2018-19, as against Rs 4,755.33 crore in the same period of 2017-18, Allahabad Bank said in a regulatory filing.

On the asset front, the bank witnessed rise in its gross non-performing assets (NPAs) at 17.81 per cent of the gross advances as at December-end 2018, as against 14.38 per cent by December 2017.

In value terms, gross NPAs or bad loans stood at Rs 28,218.79 crore, higher than Rs 23,260.81 crore a year ago. However, the net NPAs were brought down to 7.70 per cent (Rs 10,865.26 crore) from 8.97 per cent (Rs 13,646.52 crore).

The provisions for bad loans also reduced to Rs 1,900 crore for the reported quarter, as against Rs 2,044.23 crore a year ago. The overall provisions and contingencies were at Rs 1,495.34 crore, down from Rs 2,413.46 crore.

For accounts under provisions of Insolvency and Bankruptcy Code (IBC), the bank is holding provision of Rs 4,887.17 crore (75 per cent of total outstanding as on December 31, 2018, it said.

The Hans India reported

FE: Bhushan Power lenders likely to reject Sanjay Singal’s last-minute offer

7 February 2019: Lenders to Bhushan Power and Steel (BPSL) are likely to reject the last-minute offer made by the debt-ridden firm’s erstwhile owner Sanjay Singal of repaying financial creditors in full. JSW Steel has already been chosen by the lenders as the most preferred bidders for BPSL. The lenders are scheduled to meet on February 8 to decide on the matter.

Singal has offered to pay the financial creditors in full and take the company out of the corporate insolvency resolution process (CIRP), under section 12 A of the Insolvency and Bankruptcy Code (IBC), by converting their entire debt into cumulative redeemable preference shares, payable over 17 years.

Sources said both SBI and PNB, having around 20% and 9% shares, respectively, in the committee of creditors (CoC), may oppose Singal’s offer at the Friday meeting. A proposal to withdraw an application under Section 7 or Section 9 or Section 10 of the IBC, on an application made by the applicant, has to have 90% of voting share of the CoC.

A clutch of 34 financial creditors have claimed Rs 47,303 crore from the company as on January 3, 2019, of which, the RP has admitted claims worth Rs 47,150 crore. Singal, sources said, has also offered to pay the operational creditors of the company their due in 5-6 years.

Sources also said that as per the National Company Law Appellate Tribunal’s February 4 order, BPSL’s resolution professional Mehender Kahndelwal would submit JSW Steel’s resolution plan either on Friday (February 8) or Monday (February 11).

On February 4, NCLAT paved the way for JSW Steel to take over BPSL, dismissing Tata Steel’s objections that lenders had given the Sajjan Jindal-led firm undue chances to revise its bid even after declaring Tata Steel as the preferred bidder.

BPSL’s financial creditors have in August last year approved JSW Steel’s resolution plan that involves a payment of Rs 19,350 crore to the financial creditors, implying a near 60% haircut for lenders. Apart from this, the Sajan-Jindal promoted company has offered to pay operational creditors a sum of Rs 350 crore against their admitted claims of Rs 733 crore. In its order, NCLAT has also directed the RP to submit the best plan to the NCLT immediately and asked NCLT to pass an order after evaluating the bid and keeping in mind the interests of operational creditors.

The Financial Express reported