Tata Steel Issued Notice by NCLAT over Bhushan Steel Sale

Tata Steel Issued Notice by NCLAT over Bhushan Steel Sale

New Delhi: In response to the petition filed by Neeraj Singhal, promoter of Bhushan steel, The National Company Law Appellate Tribunal (NCLAT) issued a notice to Tata Steel on Monday. Singhal challenged the sale and hence the NCLAT issued a notice to Tata Steel, the resolution professional and committee of creditors (CoC) of Bhushan Steel. The tribunal also declined to stay Tata Steel Ltd’s acquisition of debt-laden Bhushan Steel Ltd. Under the insolvency and bankruptcy code.

The NCLAT bench, headed by Chairman Justice S.J. Mulhopadhyaya said, “Let us decide the law but not stall the process. The resolution process would be subject to the final outcome of the case.” Further, the bench directed the matter to be listed on May 30 and asked the parties to file their replies in a week.

Challenging the eligibility of Tata Steel as resolution applicant under Section 29A of the Insolvency and Bankruptcy Code, Singhal also contended that neither he was given any notice when the CoC was approving the resolution plan nor he was given a copy of resolution plan.

Singhal, who holds around 22 per cent stake in Bhushan Steel asked NCLAT to put a stay on acquisition of Bhushan Steel. Notably, NCLT approved Tata Steel’s bid for Bhushan Steel.

On Friday, Tata Steel released a statement said that it has taken controlling stake of 72.65 per cent in Bhushan Steel and paid the admitted corporate insolvency costs and employee dues. The statement further read, “Settlement of amounts equivalent to Rs. 35,200 crore towards financial creditors of Bhushan Steel is being undertaken, and Rs. 1,200 crore will be paid to the operational creditors of Bhushan Steel over a period of 12 months.”

L&T (Larsen & Toubro Ltd) has also approached the tribunal against the order of NCLT which approved sale of debt-laden firm to Tata Steel. The plea of L&T would be heard tomorrow i.e. Tuesday.

Notably, NCLT approved the resolution plan submitted by the RP of Bhushan Steel on May 15. The RP of Bhushan Steel found Tata Steel as the highest bidder. Rs. 32,500 crore deal along with 12.27 per cent equity in the company offered by Tata Steel was approved by the CoC.