In a major setback for JSW Steel, the Supreme Court of India on directed the liquidation of Bhushan Power and Steel Ltd (BPSL), rejecting the ₹19,700-crore resolution plan submitted by JSW Steel. The Court held that the resolution plan approved by the Committee of Creditors (CoC) was illegal and should not have been accepted.
A Bench of the Supreme Court ruled that the CoC’s approval of JSW Steel’s bid for BPSL was contrary to the provisions of the Insolvency and Bankruptcy Code (IBC) and cannot be sustained. “The plan was illegal and ought not to have been entertained,” the Court observed, while ordering the commencement of liquidation proceedings against the debt-ridden steelmaker.
Following the ruling, shares of JSW Steel plunged nearly 4% on the Bombay Stock Exchange, trading at ₹986 apiece as of 11:30 a.m. on May 2.
JSW Steel had earlier emerged as the successful resolution applicant under the IBC framework, with its ₹19,700-crore bid for BPSL receiving CoC approval. However, the apex court’s decision has now stalled the acquisition, impacting JSW Steel’s strategic growth plans in the steel sector.
The legal proceedings surrounding BPSL had earlier seen developments in other forums. In 2020, the Enforcement Directorate filed a prosecution complaint naming Bhushan Power and Steel Ltd, along with its then Chairman and Managing Director, in a money laundering case linked to an alleged bank fraud of ₹47,204 crore. The case had significantly complicated the resolution process.
In a related matter, the Delhi High Court had earlier this year set aside money laundering proceedings against BPSL, which had been considered a positive development for the resolution applicant. However, the Supreme Court’s latest order now effectively renders those developments moot in the face of the liquidation directive.
