NCLAT issues notice to Tata Steel over Bhushan Steel acquisition
22 May 2018
The National Company Law Appellate Tribunal (NCLAT) on Monday refused to grant an interim stay on acquisition of Bhushan Steel Ltd by Tata Steel Ltd after the latter on Friday announced its acquisition of Bhushan Steel through its wholly-owned subsidiary Bamnipal Steel Ltd.
The appellate tribunal’s ruling comes on an appeal by Bhushan Steel promoter Neeraj Singal challenging an order of the National Company Law Tribunal (NCLT) approving Tata Steel’s acquisition of debt-laden Bhushan Steel under the corporate insolvency resolution process.
“Let us decide the law, but not stall the process,” a bench headed by Justice SJ Mukhopadhyay said. It, however, clarified that the acquisition process would be subject to the final outcome of the appeal.
The NCLAT bench also issued notices to the resolution professional, committee of creditors and Tata Steel, asking them to file their replies within seven days.
The bench also asked Tata Steel to enclose the relevant portion of its resolution plan for Bhushan Steel, disclosing the proposals for financial creditors, operational creditors, secured and unsecured creditors as well as shareholders and submit an estimated deadline for the execution of its resolution.
Notices were also issued to two more parties — Bhushan Steel Employees Union and Larsen and Toubro Ltd — that had raised objections against the resolution plan submitted by Tata Steel before the NCLT.
The counsel appearing for Singal, UK Chaudhary, argued that Tata Steel was ineligible to bid in view of Section 29A of the Insolvency and Bankruptcy Code. Chaudhary further sought setting aside of the resolution process for Bhushan Steel arguing it was “illegal”.
L&T, which has a claim of over Rs900 crore against Bhushan Steel, has moved a separate appeal against the approval granted to Tata Steel’s resolution plan, saying that it is oppressive against operational creditors.
On 15 May, The NCLT’s principal bench approved Tata Steel’s resolution plan promising an upfront payment of Rs35,200 crore to lenders, along with a 12.27 per cent stake in the steel maker.
Pursuant to the order, Tata Steel has reportedly acquired a controlling stake of 72.65 per cent in Bhushan Steel for around Rs36,400 crore.
Singal, who holds around 22-per cent stake in Bhushan Steel, had requested the appellate tribunal to maintain status quo over the company's shareholding.
On 15 May, the NCLT approved the resolution plan submitted by the RP of Bhushan Steel, which has found Tata Steel as the highest bidder.
The Committee of Creditors had approved the Rs32,500 crore deal along with 12.27 per cent equity in the company offered by Tata Steel.
The appeal will be next heard on 30 May.