The Indian Finance Ministry has expressed support [1] for banks planning to challenge the Supreme Court’s recent decision that overturned JSW Steel’s ₹19,700-crore acquisition of Bhushan Power and Steel (BPSL). The ruling cited violations of the Insolvency and Bankruptcy Code (IBC), prompting lenders to argue that the court should have given greater weight to the commercial decisions made by the Committee of Creditors (CoC) amid ongoing appeals and asset attachments.
Officials familiar with the matter indicated that banks are preparing to file a review petition, with the government backing their right to explore all legal avenues. The corporate insolvency resolution process for BPSL was initially led by Punjab National Bank and included other major lenders such as the State Bank of India.
The Supreme Court’s verdict criticized the CoC for inconsistencies in its approach throughout the proceedings, suggesting that it had failed to exercise commercial wisdom in the best interests of creditors. However, banking executives maintain that their priority was to salvage the company and prevent financial losses for all stakeholders. They have also raised concerns about delays in the insolvency process due to legal challenges and asset attachments by the Enforcement Directorate.
In response to the ruling, the Finance Ministry is expected to consult with the Ministry of Corporate Affairs, the Insolvency and Bankruptcy Board of India (IBBI), and the Law Ministry to determine the government’s next steps. Meanwhile, JSW Steel may also file a separate review petition, citing its own grievances regarding the court’s decision.
Sources:
[1] FinMin to support lenders in reviewing SC JSW steel order https://economictimes.indiatimes.com/industry/indl-goods/svs/steel/finmin-to-support-lenders-in-reviewing-sc-jsw-steel-order/articleshow/120952526.cms?from=mdr