SC rejects JSW Steel’s resolution plan, orders Bhushan Power and Steel’s liquidation

By | May 2, 2025

SC Rejects JSW Steel’s Bid for Bhushan Power and Steel, Orders Liquidation

In a landmark decision, the Supreme Court has turned down JSW Steel’s resolution plan to acquire Bhushan Power and Steel Limited (BPSL). The court ruled that the proposal did not meet the standards set by the Insolvency and Bankruptcy Code (IBC). Instead, it ordered that BPSL should be liquidated.

Background of the Case

BPSL became one of the first 12 large companies the Reserve Bank of India referred for insolvency in 2017. The company owed over ₹47,000 crore. Several bidders showed interest, and JSW Steel eventually offered ₹19,700 crore to take over BPSL. The Committee of Creditors approved this plan. Both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) cleared it as well.

Despite these approvals, legal complications and pending enforcement actions delayed the process. The Supreme Court reviewed the matter after various appeals and concerns over how the plan was structured.

Why the Supreme Court Rejected the Plan

The court raised several concerns about JSW Steel’s proposal:

  • Unclear Funding Structure: The plan included equity and instruments like optionally convertible debentures. The court found this mix lacked transparency and accountability.
  • Missed Timelines: The IBC focuses on fast resolutions. The delay in executing the plan went against this goal.
  • Strategic Delays by JSW Steel: The court noted that the company seemed to benefit from legal delays instead of pursuing a quick and fair deal.
  • Weak Scrutiny by Creditors: The judges criticized the banks and lenders for not carefully reviewing the plan before approving it.

What’s Next for BPSL?

The court’s decision moves BPSL into liquidation. This process means selling its assets instead of reviving the company. Lenders, who once expected a recovery of nearly ₹20,000 crore, may now face significant losses.

JSW Steel, which had already taken control of some assets and operations, must now reconsider its next steps. The company may explore further legal options or shift its strategy altogether.

Broader Impact on India’s Insolvency System

This ruling could change how future insolvency cases play out:

  • Stricter Compliance Checks: Courts and regulators will examine funding plans and timelines more closely.
  • Caution Among Investors: Bidders may now hesitate to invest in companies with ongoing legal or enforcement issues.
  • Higher Standards for Creditors: Banks will need to conduct better evaluations before approving complex deals.

Conclusion

The Supreme Court’s ruling sends a strong message about following the IBC in both spirit and letter. While this move protects the law’s integrity, it also leaves lenders and bidders in a tough spot. As liquidation begins for Bhushan Power and Steel, stakeholders will watch closely to see how the process unfolds—and what lessons it offers for future resolutions.