Resolution rejected

Supreme Court order raises serious questions

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The Supreme Court's ruling last week that JSW Steel's resolution plan for Bhushan Power & Steel Ltd (BPSL) was illegal can result in a serious setback to the process of recovery from bankruptcy. In a landmark judgment, the apex court also ordered the liquidation of BPSL, four years after its resolution plan was approved. While the affected parties may choose to appeal, the court's order is a serious indictment of those involved and raises critical questions about the effectiveness of the resolution process under the Insolvency and Bankruptcy Code (IBC).

The apex court has ruled that the resolution plan did not conform to the requirements in Section 30(2) of the IBC, among others, and noted that the resolution professional (RP) completely failed in discharging his statutory duties under the IBC.