JSW Steel seeks refund of Bhushan Power and Steel-linked payments

JSW Steel has issued demand notices to banks seeking a refund of payments made toward its Rs 19,300-crore resolution plan for Bhushan Power and Steel ( BPSL), besides asking for its liquidation to be delayed for 60 days, said people aware of the matter.

The Supreme Court, earlier this month, struck down JSW’s 2019 acquisition of the distressed company citing various non-compliances, and ordered BPSL’s liquidation.

The notices issued less than two weeks ago clarified that the demand for refunds was in accordance with Supreme Court directives, those in the know said. JSW Steel is considering its legal options and, therefore, seeking a 60-day pause on action on Bhushan Power, they said. It’s widely expected that JSW will seek a review of the top court’s verdict.

While the liquidation will be conducted by the National Company Law Tribunal (NCLT), creditors have a right to appoint the liquidator and oversee the process. In its May 2 ruling, the apex court cited precedents on steps to be taken if a resolution plan is rejected.

Payments Accepted Despite Case

“The upfront payment amount shall be refunded by the CoC (committee of creditors) to the resolution applicant, JSW, within the time period provided for in the March 6, 2020, order… the ownership, control and possession of the corporate debtor will be handed back by JSW to the financial creditors,” it had said. Creditors had then told the Supreme Court they would refund the money within two months, if JSW’s resolution plan was rejected.

BPSL had obligations worth more than Rs 45,000 crore at the time it was admitted for insolvency proceedings. JSW Steel’s resolution plan was the highest offer the creditors got at the time. Payments were accepted, though there was ongoing litigation, including a challenge from former BPSL promoter Sanjay Singhal.

JSW Steel declined to comment on the matter. Punjab National Bank, which leads BPSL’s committee of creditors, did not respond to queries.

NCLT had approved JSW Steel’s resolution plan for BPSL on September 5, 2019. This was upheld by the National Company Law Appellate Tribunal (NCLAT) on February 17, 2020. However, the effective date for its implementation was shifted to March 31, 2021.