In total, Bhushan Steel owes about Rs 40,000 crore to at least 20 lenders.
A similar argument had occurred in the case of Monnet Ispat — another of the top 12 non-performing accounts in the country identified by the Reserve Bank of India (RBI) last month. Then, SBI was unable to give the exact figure of dues to the Mumbai Bench of the NCLT.
Bhushan Steel’s lawyer also said the company’s restructuring plan was at an advanced stage of approval under the Scheme for Sustainable Structuring of Stressed Assets (S4A) of the RBI; a parallel insolvency process was not required.
Under the RBI’s S4A scheme, banks are required to conduct a forensic audit to ensure there was no malfeasance by the promoter. If the audit finds anything amiss, S4A cannot be implemented unless there is a change in ownership.
Bhushan Steel’s lawyer argued such an audit had been conducted for the company and it was established there had been misappropriation of funds. The company tried to stop the insolvency petition from being admitted by the NCLT, and claimed JSW has shown interest in acquiring it.
In response, the banker’s counsel said since the company has been trying to restructure, it should be done in a time-bound manner. Hence, the insolvency petition should be accepted.
Under the insolvency process, the company gets 180 days for restructuring after approval of the application by the NCLT; this period can be extended by 90 days. If the loan is not restructured in this period, the assets are liquidated.
The NCLT reserved its order on the Bhushan Steel’s bankruptcy petition Wednesday.
Bhushan Power and Steel case
The case of Bhushan Power and Steel also came up for hearing in the Delhi Bench of the NCLT.
Both this petition and the one for Bhushan Steel were filed under the Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. Punjab National Bank (PNB) is the lead banker to Bhushan Power and Steel.
The bankers’ petition was not challenged by the company. PNB has dues of Rs 4,000 crore out of a total of Rs 37,000 crore.
The NCLT has reserved its order in this case as well.
In Bhushan Power and Steel’s case, the NCLT asked bankers to provide proof of the insolvency professionals’ qualifications before the case was admitted.
Chartered accountants, company secretaries, and advocates with 10 years of experience are eligible to be insolvency professionals. They have to clear an insolvency examination conducted by the regulator, the Insolvency and Bankruptcy Board of India.