The National Company Law Tribunal (NCLT) reserved its orders over the bankruptcy petitions filed by State Bank of India and Punjab National Bank against Bhushan Steel and Bhushan Power and Steel respectively.
While SBI is the lead banker for Bhushan Steel; it is PNB which is the lead banker to Bhushan Power and Steel. The two filed the petitions separately under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, where the financial creditor initiates insolvency proceedings with a claim.
SBI claimed to have an outstanding, as of June 30, 2017, of Rs 4,295 crore and a USD 490 million forex loan to Bhushan Steel. Bhushan Steel did not agree with the figure and said that there was a difference of Rs 100 crore to the figure stated by the lender. Bhushan Steel has a total debt of around Rs 43,000 crore.
PNB moved to the NCLT for initiating insolvency proceedings against Bhushan Power and Steel attempting to recover its outsanding exposure of Rs 4,000 crore. It claims that the company has a total outstanding debt of over Rs 37,000 crore.
While Bhushan Power and Steel has no objection to the initiation of insolvency resolution process (IRP), but it said that the company should be treated as a going concern; Bhushan steel contested SBI’s plea and argued that the company was on the right track.
Financial creditors assess, during the IRP, whether the debtor’s business is viable to continue. But, if during the insolvency resolution process, 75% majority of the creditor’s committee resolves, the entity goes for liquidation.
Reserve Bank had on June 13 directed banks to initiate insolvency proceedings against 12 large defaulters including Essar Steel and Monnet Ispat.
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