JSW Steel Ltd's shares fell as much as 7% on BSE to Rs961.60 following rejection by the Supreme Court of the company's resolution plan for Bhushan Power & Steel Ltd. While rejecting JSW Steel's Rs19,700 crore resolution plan, the apex court ordered liquidation of Bhushan Power & Steel.
In an order, a bench of justice Bela M Trivedi and justice Satish Chandra Sharma says the resolution plan submitted by JSW Steel was 'illegal' and contrary to the provisions of the Insolvency and Bankruptcy Code (IBC) and it should not have been accepted by the committee of creditors (CoC).
In a regulatory filing, JSW Steel says, "We learnt that the Supreme Court pronounced Judgment on Friday, 2 May 2025, rejecting the resolution plan submitted by the Company and approved by the National Company Law Appellate Tribunal (NCLAT), on certain grounds. We are yet to receive the formal copy of the order to understand the grounds for rejection in detail and its implications. Once we receive the order and are able to review the same along with our legal advisors, we will decide on our further course of action."
The matter reached the Supreme Court amid growing concern that JSW Steel had not implemented the plan for the years since its approval. The Court noted that the resolution applicant failed to fulfil essential post-approval obligations, undermining the very objectives of the IBC, which include time-bound resolution of insolvency and maximisation of asset value.
Notably, in December 2024, the directorate of enforcement (ED) decided not to pursue its appeal before the Supreme Court against JSW Steel's takeover of Bhushan Power & Steel under the IBC.
It also returned attached assets valued at Rs4,025 crore to JSW Steel so that it could take control of Bhushan Power & Steel pursuant to the insolvency resolution process under IBC.
The restitution was made after the Supreme Court’s order of 11 December 2024, directing ED to hand over the attached properties of Bhushan Power, after the central agency decided not to pursue its case against Bhushan Power & Steel.
In March 2021, lenders of Bhushan Power & Steel approved with most votes to close the company's deal with JSW Steel.
Lenders, including State Bank of India (SBI), Punjab National Bank (PNB) and Canara Bank, voted in favour of the proposal to accept payment according to the resolution plan with an undertaking to refund the amount in the event the Supreme Court gives an adverse order.
SBI, the largest lender to Bhushan Power & Steel and by accepting the resolution plan, was expected to recover over Rs4,000 crore. PNB was expected to recover Rs4,399 crore while Canara Bank could have got Rs2,244 crore from the plan. With this resolution plan, all creditors of Bhushan Steel were expected to gain 41% (Rs19,500 crore) as against their claims of Rs48,000 crore.
As per the resolution plan, the Sajjan Jindal-led steel-maker was expected to deposit Rs19,350 crore within two weeks in an escrow account. .
In September 2019, national company law tribunal (NCLT) had approved JSW Steel’s Rs19,700 crore bid for Bhushan Power & Steel.
Later in February 2020, NCLAT also approved JSW Steel's resolution plan. NCLAT granted immunity to JSW Steel from the litigations of Bhushan Power & Steel under Section 32a of the IBC. The Tribunal also directed investigative agencies not to seize the assets of Bhushan Power & Steel.
Bhushan Power & Steel, which had a steel-making capacity of around 2.75MTPA (metric tonnes per annum) in Odisha, was under insolvency proceedings since 2017.
JSW Steel emerged as the preferred bidder in 2019 after raising its earlier bid higher than rivals such as Tata Steel Ltd. News reports indicated JSW Steel’s bid valued Bhushan Power & Steel’s assets at around Rs19,500 crore, and JSW Steel had indicated that it will assume a minority stake in the company post-acquisition after finding a partner.
In September 2020, SBI had invoked the personal guarantees of Sanjay Singal, former promoter of Bhushan Power & Steel and sent him a demand notice for recovery of Rs12,275.91 crore.
