MUMBAI: The National Company Law Appellate Tribunal (NCLAT) on Monday refused to grant an interim stay on the acquisition of debt-ridden Bhushan Steel by Tata Steel.“Let us decide the law, but not stall the process,” the bench headed by Justice S J Mukhopadhyay said and issued notices to the resolution professional, committee of creditors and Tata Steel, asking them to file their replies within seven days. This means the acquisition process will be subject to the final outcome of the appeal.
The bench was hearing the petition filed by Bhushan Steel’s promoter Neeraj Singal challenging NCLT’s order approving Tata Steel’s resolution plan for the debt-laden steelmaker. It argued that Tata Steel was ineligible to bid in view of Section 29A of the Insolvency and Bankruptcy Code and sought setting aside the resolution process, which it termed “illegal”.Notices were also issued to Bhushan Steel Employees Union and L&T, which separately had raised objections against the Tata Steel’s resolution plan. L&T, which has a claim of over `900 crore against Bhushan Steel, appealed against the resolution plan, saying it was oppressive against operational creditors. The plea will be heard Tuesday.
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.Bhushan Steel was among the 12 stressed assets the RBI had referred for resolution last year. Last week, NCLT approved Tata Steel’s resolution plan promising an upfront payment of `35,200 crore to lenders, along with a 12.27 per cent stake. Consequently, Tata Steel said it acquired a controlling stake of 72.65 per cent in Bhushan Steel for about `36,400 crore.
Meanwhile, Finance Ministry officials said Tata Steel’s acquisition of debt-laden Bhushan Steel will reduce bank NPAs by `35,000 crore. “About `35,000 crore reduction of NPAs of PSBs in Bhushan Steel case. Reduction of NPAs in individual PSBs range from about `500 crore to over `10,000 crore,” Rajeev Kumar, Financial Services Secretary, tweeted Monday.
He added that the acquisition will enable public sector banks to write back `7,500 crore of loans, which were earlier classified as NPAs. “Further upside through over six crore equity shares acquired by PSBs. Decisive shift towards clean credit culture,” he tweeted.This was in addition to interim Finance Minister Piyush Goyal’s tweet that the acquisition was a historic breakthrough in resolving legacy issues of banks.