UPDATE 3: 10:49 a.m. ET 4/7/2020: The committee of creditors (CoC) of Bhushan Power & Steel has sent a letter to JSW Steel stating that they are adding interest charges on INR 193.5 billion as compensation for JSW’s failure to implement the resolution plan for the insolvent steelmaker within the deadline, according to a copy of the letter seen by Reorg.
In the April 3 letter, the CoC said it was seeking compensation from JSW as it failed to implement the resolution plan which led to direct losses to members of the CoC. Thus, according to the letter, JSW should make good to the members of the CoC:
- INR 193.5 billion on and from March 18
- Interest on INR 193.5 billion at the rate of Punjab National Bank’s marginal cost of fund-based lending rate (MCLR) along with applicable spread + 2%
The CoC has received legal advice that the resolution plan is binding on JSW and JSW is under obligation under the express terms of their own resolution plan to implement the same within 30 days of the NCLAT judgment as there is no stay granted to the operation of the resolution plan, the letter added.
JSW is only liable for consequences of the delay to the members of the CoC as the stay on the resolution plan was sought by JSW without seeking a stay against the NCLAT judgment, the letter states.
JSW was asked to immediately provide or extend the validity of the existing performance bank guarantee of INR 1 billion within five days failing which the performance bank guarantee shall be invoked, according to the letter.
On March 19, the CoC had written to JSW Steel saying that the company should implement the resolution plan within seven days, failing which the bank guarantees would be invoked and compensation would be claimed, as
reported. JSW should have implemented the plan within 30 days of the National Company Law Appellate Tribunal
approving the plan on Feb. 17 as per clause 3.1 of the plan, the March 19 CoC letter stated, as reported.
A spokesperson for JSW declined to comment as the matter is sub-judice.
-- Santanu Chakraborty
UPDATE 2: Bhushan Power CoC to Invoke Bank Guarantees, Claim Compensation if JSW Steel Fails to Implement Resolution Plan Within Seven DaysUPDATE 2: 3:34 a.m. ET 3/20/2020: The Committee of Creditors (CoC) of Bhushan Power and Steel will invoke bank guarantees and claim compensation from JSW Steel Ltd. if the latter fails to implement the resolution plan for the insolvent steelmaker within seven days, according to a copy of a letter sent to JSW Steel by the CoC and seen by Reorg.
JSW Steel should have implemented the resolution plan by March 18, within 30 days of the National Company Law Appellate Tribunal
approving the plan on Feb. 17 as per clause 3.1 of the plan, according to the document.
The CoC will act as per clause 1.10.2 of its request for proposal dated Dec. 14, 2017, according to the letter. If JSW Steel fails to implement the plan, the “bank guarantees provided by JSW may be invoked as per the request for proposal,” according to the document. The “access to BPSL facilities’’ provided to JSW’s employees “for the purpose of planning the implementation of the resolution plan will be revoked,” the letter said. JSW will also “be required to compensate the creditors for the delay in recovery and implementation of the resolution plan,’’ the letter stated.
A JSW spokesman declined to comment as the matter is sub-judice. The resolution professional declined to comment saying the CoC is scheduled to hold a meeting today (March 20) to discuss the next course of action.
On March 19, JSW Steel said in a BSE
announcement that it has been “legally advised that it is not obligatory to implement the resolution plan” for BPSL “during the pendency of appeals” in the Supreme Court, as
reported.
The Supreme Court of India has admitted a
petition filed by Bhushan Power’s former chairman Sanjay Singal
challenging the Feb. 17 ruling of NCLAT that gave immunity to JSW Steel from federal investigations, according to a copy of the
order.
-- Santanu Chakraborty
UPDATE 1: JSW Steel Says Legally Not Obligatory to Implement Bhushan Power Resolution Plan as Appeals Pending in Supreme Court; Company Claims Incorrect to Say Missed Payment DeadlineUPDATE 1: 12:13 p.m. ET 3/19/2020: JSW Steel
announced to the BSE Ltd. today (March 19) that it has been “legally advised that it is not obligatory to implement the resolution plan” for Bhushan Power and Steel “during the pendency of appeals” in the Supreme Court. Thus, it is “incorrect to state that JSW Steel has missed any payment deadline,” the filing said.
The company was replying to a clarification sought from the BSE on March 17 to a
Hindu Business Line article which stated that JSW Steel had missed a deadline to make a payment to acquire Bhushan Power.
Original Story 10:27 p.m. UTC on March 17, 2020BSE Seeks Clarification on Article Stating Final Payment for Bhushan Power and Steel Acquisition Missed The BSE Ltd announced on March 17 that it has sought clarification from JSW Steel on an article on
Hindu Business Line on March 16 which stated that JSW Steel had missed a deadline to make a payment to acquire restructured Bhushan Power and Steel pending final approval from the Supreme Court.
A reply to the query is awaited, the BSE stated.
The Hindu Business Line’s unsourced article states that JSW Steel decided not to make the final payment for Bhushan Power and Steel pending final approval from India’s Supreme Court. The deadline for payment was March 16, according to the article.
The Supreme Court of India has admitted a petition filed by Bhushan Power & Steel Ltd former chairman Sanjay Singal challenging the Feb. 17 ruling of the National Company Law Appellate Tribunal (NCLAT) that gave immunity to JSW Steel from federal investigations, according to a copy of the
order.
In the admittance hearing on March 6, Bhushan’s committee of creditors (CoC) pledged to return the resolution amount within two months if the Supreme Court rules in favor of Singal.
On Feb. 17, NCLAT gave JSW Steel immunity from federal investigative actions and thus removed a significant roadblock for the implementation of JSW's INR 197 billion ($2.8 billion) resolution plan for Bhushan Power & Steel, as
reported.
The Supreme Court has directed that it shall hear Singal’s petition and other related matters together on April 15.
Singal’s appeal claims that the NCLAT’s ruling has gone beyond its jurisdiction and the powers provided under the Insolvency and Bankruptcy Code, and in doing so, has “erroneously modified” the previous order of National Company Law Tribunal New Delhi by granting relief to JSW Steel to the prejudice of Singal and other stakeholders, as
reported.
Read Reorg’s coverage of Bhushan Power
HERE.