The Supreme Court of the country has declared the ₹ 19,700 crore resolution plan presented by JSW Steel for the acquisition of Bhushan Power and Steel Limited (BPSL) as illegal and has ordered the liquidation of this debt-ridden company.
The plan had earlier received approval from the Committee of Creditors (CoC) of BPSL. However, the Supreme Court in its judgment said that JSW Steel had provided equity as well as equity in funding the acquisition. Optionally convertible debentures (OCDs), which is a violation of the rules under the Insolvency Law. The court also said that the resolution plan was not implemented within the stipulated time frame, which is mandatory by law.
After this decision, JSW Steel shares fell by 5%.
The court’s decision on the debt-ridden firm which the company was trying to buy through the insolvency process has gone against it.
After this decision, JSW Steel has said that after receiving the formal order of the court, it will review it with its legal advisors and decide the future strategy.
The statement issued by the company said, “We have received information that the Honorable Supreme Court has today, i.e. on 2nd May 2025, rejected the resolution plan approved by NCLAT on certain grounds. However, we have not yet received an official copy of this decision, so that we can understand in detail on which grounds the plan was rejected and what its implications will be.”
The statement further said that the company, in consultation with its legal advisors, will decide the further strategy after reviewing the order. The company also assured that as soon as there is any new update, it will inform the stock market as per the rules.
Bhushan Power and Steel Limited (BPSL) was acquired by JSW Steel in 2021 under the Insolvency and Bankruptcy Code (IBC). Initially the company had purchased 49% stake in BPSL, thereby adding 2.75 million tonnes per annum (MTPA) steel production capacity in Odisha. This year, from October 1, 2021, JSW had increased its stake to 83.3%.
Although JSW Steel was declared the successful resolution applicant for BPSL, the deal was entangled in legal hurdles right from the start. In 2020, the Enforcement Directorate (ED) had named BPSL and its former top management in a ₹47,204 crore bank fraud and money laundering case, delaying the deal process.
Recently, Delhi High Court had quashed the money laundering proceedings against BPSL, which brought some relief to JSW. But now the Supreme Court has rejected this entire resolution plan. This decision is affecting not only JSW Steel, but BPSL’s employees, lenders and the entire insolvency resolution system.
First Published – May 2, 2025 | 2:52 PM IST
