NCLT approves Tata Steel's bid for Bhushan Steel

Lloyd Doyle
May 16, 2018

On 17 April Tata Steel became the first company to successfully bid for a stressed company which had high NPAs under the IBC law.

Tata Steel will hold a 72.65 per cent stake in bankrupt Bhushan Steel Ltd following the closure of the resolution plan which has been approved by the principal bench of the National Company Law Tribunal on Tuesday after rejecting objections raised by three constituents. This plan was approved the committee of creditors for debt ridden Bushan Steel with a 99.8% majority vote after testing its "commercial viability and feasibility". Tata has said it would retain all employees. NCLT has also directed BSL's ex-management to cooperate with the monitoring agency during the implementation of the resolution plan and granted it liberty to approach it during the process.

With the deal now approved by NCLT, Tata Steel will add 5.6 million tonnes per annum to its existing capacity of 13 mtpa and emerge as the largest steel producer in the country, ahead of JSW Steel. Additionally, Tata will pay another Rs 1,200 crore to the operational creditors. It had a liquidation value of Rs 14,541 crore.

The tribunal also imposed a penalty of ₹1 lakh each on Larsen and Toubro and on Bhushan Steel employees.

The CoC had selected Tata Steel, which had offered Rs 32,500 crore as upfront payment along with 12.27 per cent equity in BSL to the creditors.

The Bench, comprising NCLT President Justice MM Kumar and SK Mohapatra, also dismissed Bhushan Energy's plea to direct Tata Steel, the new owners of Bhushan Steel, to continue with its power purchase agreement.

NCLT has also dismissed L&T's plea seeking higher priority in the recovery of a loan as the financial creditor and imposed Rs 1 lakh fine.

Other reports by Iphone Fresh

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