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HANGING IN BALANCE
Business Standard
|May 05, 2025
The SC verdict could mean a reset for the IBC process, even as JSW Steel is expected to file a review petition
Flash back to March 26, 2021. JSW Steel had just completed its largest acquisition—Bhushan Power and Steel (BPSL)—under the Insolvency and Bankruptcy Code (IBC).
"This acquisition not only aligns with our core business and purpose but also establishes our presence and accelerates our growth vision in eastern India," Sajjan Jindal, chairman of JSW Steel, had written to BPSL employees after paying financial creditors ₹19,350 crore.
Four years later, on May 2, 2025, that vision took a severe blow when the Supreme Court rejected JSW Steel's resolution plan for BPSL and ordered its liquidation.
The big jolt
The apex court struck down JSW Steel's resolution plan primarily on two counts. A change in the financing structure from what was laid out in the resolution plan at the time of evaluation of bids. And a breach of timeline.
The court noted gross noncompliance of the mandatory provisions of the IBC and the regulations and an attempt made by JSW to misuse the process of the court by not making the upfront payments for about two and a half years.
JSW made payment to the financial creditors in March 2021 and to the operational creditors in March 2022.
Since acquisition, JSW has expanded capacity from 2.75 million tonne (mt) at the BPSL plant in Jharsuguda, Odisha, to 4.5 mt. And there are plans for further expansion.
An Axis Capital report said, BPSL contributed 13 per cent of JSW Steel's consolidated volume and 10 per cent of its consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation) in the first nine months of FY25.
There is a lot at stake here.
Equity in responsibility
The apex court order four years after the acquisition raises questions whether it's too late.
The IBC aims to resolve insolvency cases within strict timelines, points out MS Sahoo, former chairperson of the Insolvency and Bankruptcy Board of India (IBBI).
This story is from the May 05, 2025 edition of Business Standard.
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