According to the latest updates in BPSL’s (Bhushan Power and Steel Ltd) insolvency proceedings, the NCLAT (National Company Law Appellate Tribunal) on Thursday has reserved its order on finalisation of bids submitted by the bidders.
Reserving order is a legal term which is used when after the hearing of a trial or the argument of a motion a judge does not immediately deliver a decision, but instead take time to review evidence and the law and deliver a decision at a later time, usually in a written form.
NCLAT completed hearing the arguments on a plea filed by Tata Steel Ltd. which alleged that lenders of BPSL allowed rival JSW Steel Ltd. to change the basic parameters of its bid after declaring Tata Steel as the highest bidder. The concerned parties are given time by 26 Dec’18 by the tribunal to submit their written submissions (if any).
The case so far
In June last year, BPSL with a steelmaking capacity of 3 MnT and a debt of more than INR 48,500 crore, featured among the 12 accounts recommended by RBI’s (Reserve Bank of India) internal advisory committee for resolution under the Insolvency and Bankruptcy Code (IBC) in June last year.
Under the resolution process, Tata Steel with the bid of INR 17,000 crore and JSW Steel with the bid of INR 11,000 crore emerged as the two leading bidders for bankrupt BPSL and Tata Steel’s bid was all set to be finalised by the CoC. The third bidder UK based Liberty House’s bid (of INR 18,500 crore) was rejected by the lenders on the grounds of being a late entrant in the bidding process.
However, when CoC was finalising the highest bidder (Tata Steel) for BPSL, the NCLAT (National Company Law Appellate Tribunal) stayed the meeting of CoC as BPSL’s operational creditors had alleged that the resolution professional hadn’t allowed their representative to attend the lenders meeting. Because of this stay order, CoC asked for submission of fresh bids from all the three bidders in the case i.e. Tata Steel, JSW Steel and Liberty House by 31 July 2018.
Liberty House was able to join the race to acquire BPSL once again as NCLAT had rejected CoC’s decision to not allow Liberty House in the bidding process on the grounds of being late entrant.
For the resubmission of bids, NCLAT in its interim order on 6 Aug’18 had directed all the three bidders Tata Steel, JSW Steel and Liberty House to improve their offers, provided basic parameters of the “resolution plans” already submitted by them were unchanged.
When the revised bids were submitted in Aug’18, JSW Steel reportedly revised its bid from an upfront payment of INR 11,000 crore to INR 19,700 crore whereas the other two bidders Tata Steel and Liberty House kept their offers unchanged.
In Oct’18, lenders of BPSL chose JSW Steel Ltd. as the preferred bidder to buy the company by giving 66.6% vote in its favour.
Tata Steel submits plea with NCLAT
After CoC’s decision, Tata Steel submitted its plea with NCLAT alleging that lenders of BPSL allowed rival JSW Steel Ltd. to change the basic parameters of its bid after declaring Tata Steel as the highest bidder.
The legal representative of Tata Steel stated in the argument that four out of five changes submitted by JSW are changes in basic parameters such as the timing of proposed payments, sources of funds for various payments proposed, letter of commitment and increase in the offer. Thus, now with NCLAT’s decision to reserve its order, it remains to be seen insolvent BPSL goes in the hands of which bidder.
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