The National Company Law Tribunal (NCLT) has approved Tata Steel’s bid of Rs 32,500 crore, along with 12.27 per cent equity to creditors, for debt-laden Bhushan Steel Ltd (BSL). The resolution plan retrieves about 67 per cent of the non-performing assets (NPAs) or bad loans and takes care of the existing employees by continuing their employment and also provide for payment of their back wages.
The tribunal accepted the plan filed by BSL’s resolution professional (RP), which was approved by the Committee of Creditors (CoC) led by SBI, after finding Tata Steel as the highest bidder. “The application filed by the RP for accepting the resolution plan approved by the CoC submitted by resolution applicant Tata Steel Ltd is accepted,” said a two member bench comprising NCLT President Justice M M Kumar and S K Mohapatra.
Bhushan Steel was on the RBI’s first list of 12 companies referred to the National Company Law Tribunal last year.
In its 85-page order, the tribunal also gave approval for the appointment of a monitoring agency for the deal. 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. “Liberty is grated to the monitoring agency to apply for any further direction against the ex-management, its directors or any other officers, if such necessity arrives,” NCLT said.
The deal will help Tata Steel become India’s biggest steel maker as Bhushan Steel will add 5.6 million tonnes of capacity to Tata Steel’s current 13 MTPA production capacity. BSL had a debt of Rs 56,080 crore from 53 financial creditors and Rs 2,846 crore from 751 operational creditors, which also include workmen, employee and statutory creditors. It had a liquidation value of Rs 14,541 crore. 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. However, this was challenged by some BSL employees contending that Tata Steel was not eligible under section 29 (A) of the Insolvency and Bankruptcy Code (IBC), which was dismissed by NCLT.
NCLT also dismissed the plea of engineering major L&T, an operational creditor of BSL, which had requested for a higher preference in recovery of debt on par with the financial creditors of the corporate debtor. The application “filed by Larsen & Toubro is dismissed with cost of Rs 1 lakh… the cost be deposited in the account of BSL”, NCLT said.