Lenders of Bhushan Power Accept JSW Steel’s Proposal
Lenders of Bhushan Power & Steel Ltd have approved with most votes to close the company's deal with JSW Steel Ltd. According to reports, the resolution plan of JSW Steel received more than 65% votes. Lenders, including State Bank of India (SBI), Punjab National Bank (PNB) and Canara Bank have 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 and by accepting the resolution plan stands to recover over Rs4,000 crore. PNB would recover Rs4,399 crore while Canara Bank can get Rs2,244 crore from the plan. With this resolution plan, all creditors of Bhushan Steel would gain 41% (Rs19,500 crore) as against their claims of Rs48,000 crore. 
 
As per the resolution plan, the Sajjan Jindal-led steelmaker will deposit Rs19,350 crore within two weeks in an escrow account. Banks expect to close the deal by this month end.  
 
In September 2019, National Company Law Tribunal (NCLT) had approved JSW Steel’s Rs19,700 crore bid for Bhushan Power & Steel Ltd.  
 
Later in February 2020, the National Company Law Appellate Tribunal (NCLAT) also approved JSW Steel's resolution plan. The NCLAT granted immunity to JSW Steel from litigations of Bhushan Power under Section 32A of the Insolvency & Bankruptcy Code (IBC). The Tribunal also directed investigative agencies to not seize assets of Bhushan Power. 
 
BPSL, which has steelmaking capacity of around 2.75mtpa in Odisha state in eastern India, has been under insolvency proceedings since 2017. 
 
JSW Steel had 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 values BPSL’s assets at around Rs19500 crore, and JSW Steel had indicated that it will assume a minority stake in BPSL post-acquisition after finding a partner.
 
Last year in September, SBI had invoked the personal guarantees of Sanjay Singal, former promoter of Bhushan Power and sent him a demand notice for recovery of Rs12,275.91 crore.
 
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