Supreme Court Stays Enforcement Directorate Move To Provisionally Attach Assets Of Bhushan Power & Steel Ltd

The Supreme Court has stayed an Enforcement Directorate (ED) move to provisionally attach all assets of Bhushan Power and Steel Ltd (BPSL) and issued a notice to the agency after hearing a petition filed by its committee of creditors (CoC).

Incidentally, BPSL is under insolvency procedure in connection with money laundering charges.

The Supreme Court also asked ED to explain if its money-laundering charges would trump the insolvency proceedings by February 2020.

The CoC petition had claimed that JSW had already filed a resolution plan to take over BPSL which had been cleared by the CoC and the National Company Law Tribunal (NCLT).

However, the National Company Law Appellate Tribunal (NCLAT) ha d stayed it on October 14 due to the ED order.

The CoC plea had stated that the JSW resolution plan was worth over 19,700 crore, which is one of the biggest resolution plans in the country.

The CoC plea stated that any interference with JSW resolution the plan by way of attachment of assets of BPSL would cause huge losses to both its financial as well as operational creditors.

The CoC plea stated that the ED proceedings were regarding diversion of funds by the erstwhile management of BPSL before the resolution process was initiated and hence the ED proceedings cannot be said to overrule the resolution process.

Advocate Abhishek Manu Singhvi told the Supreme Court that the NCLAT did not take this point into account and stayed both the ED’s provisional attachment order as well as the resolution process.

The CoC also complained that despite the stay on the provisional attachment order by NCLAT, the ED continued its proceedings against BPSL and the adjudicating authority under the Prevention of Money Laundering Act (PMLA) issued show cause notices to the company on November 22.