Bhushan Power resolution plan implementation as per law: JSW Steel

JSW Steel has said that it implemented the resolution plan for Bhushan Power and Steel Ltd in compliance with law and taken all steps to successfully revive the company to its present status today. The company issued this statement while announcing its Q4 results.

“The Judgment by the Hon’ble Supreme Court on 2nd May 2025 rejected the JSW Steel’s resolution plan for BPSL and directed refund of amounts paid to creditors of BPSL, and equity contribution made in BPSL as recorded in the Hon’ble Supreme Court order dated 6th March 2020. We along with the legal advisors have assessed the matter and believe that we have strong grounds for availing all available legal remedies,” the company said in the statement.

The Supreme Court on 2 May quashed JSW Steel’s resolution plan for debt-laden Bhushan Power and Steel Ltd. (BPSL), citing gross violations of the Insolvency and Bankruptcy Code (IBC), 2016. The court ordered the immediate liquidation of BPSL, marking a significant setback for JSW Steel and raising questions about corporate governance in insolvency proceedings.

The company has informed the investors that JSW Steel through its subsidiary Piombino Steel Limited (PSL) had invested in BPSL and the carrying amount of its investments in and loans given to PSL aggregates to Rs 9,215 crores as at 31 March 2025.

Further, the Company has carried out a recoverability assessment, considering the Supreme Court Order dated 6 March 2020 and the judgement dated 2 March 2025, the ESCROW Agreement with erstwhile lenders of Committee of Creditors and legal opinion obtained by the Company, and concluded that the recoverable amount is sufficient enough to cover the carrying values in the books and hence no provision is required to be made for the investments in and loans given to PSL as on 31 March 2025.

The Company, in consultation with its legal advisors, is in the process of evaluating all options to finalise the legal remedies including Review of judgement dated 2 May 2025 of the Supreme Court. Pending the outcome of such actions, no adjustments have been made since the Company believes that there is no adverse material impact on the Standalone Financial Results as on and for the year ended 31 March 2025.

The reasons cited by the supreme count for rejecting JSW Steel’s resolution plan for Bhushan Power and Steel are as follows:

1. Timeline Violations: The resolution professional failed to adhere to the mandatory 270-day CIRP period under Section 12. The NCLT approved JSW’s plan 540 days after initiation, rendering the process “vitiated from inception.”
2. Eligibility Concerns: The court raised doubts about JSW’s compliance with Section 29A (which bars related parties from bidding) due to a suppressed 2008 joint venture with BPSL. The resolution professional’s failure to certify JSW’s eligibility was termed a “fatal flaw.”
3. Creditor Discrimination: The plan violated Regulation 38 by prioritizing financial creditors over operational creditors. The court cited the Essar Steel precedent, stressing equal treatment under Section 30(2)(b).
4. NCLAT’s Overreach: The tribunal unlawfully stayed the Enforcement Directorate’s provisional attachment of BPSL’s assets under PMLA, exceeding its jurisdiction under the IBC.

JSW’s “Misuse of Process”
The judgment lambasted JSW for delaying implementation by 900 days despite no stay order, calling it a “fraudulent attempt to enrich itself” amid rising steel prices. The court noted JSW infused only ₹100 crore initially, contravening its ₹8,550 crore equity commitment, and accepted ₹19,350 crore belatedly in 2021–22 under a disputed “fait accompli.”

Also See: SC quashes Bhushan Power and Steel resolution; orders liquidation