High Court (India)

July 27, 2017

NCLT allows bankruptcy proceedings against Bhushan Steel, BPSL


BPSL

On July 26, the Delhi Bench of the National Company Law Tribunal (NCLT) allowed bankruptcy proceedings against Bhushan Steel (the largest manufacturer of auto-grade steel in India) on a petition filed by the State Bank of India and against Bhushan Power & Steel (BPSL - a fully integrated 3.5 Million TPA Steel-Making Company) on a petition filed by Punjab National Bank.

Under the insolvency process, a company gets 180 days for restructuring after approval of the application by the NCLT; this period can be extended by 90 days. If the loan is not restructured in this period, the assets are liquidated.

Both petitions were filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, wherein the financial creditor initiates insolvency proceedings with a claim.

SBI has staked a claim of Rs 4,295 crore from Bhushan Steel, along with $490 million in foreign currency loan. The steel company’s counsel had said that SBI’s claims were about Rs 100 crore more than the actual dues. Countering the argument, SBI’s counsel said that the difference was because the dues to SBI’s subsidiaries, now merged with the larger bank, had not been considered. Five subsidiary banks of SBI were merged with it on April 1, 2017.

In total, Bhushan Steel owes about Rs 40,000 crore to at least 20 lenders.

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