JSW Steel gets lenders' nod to close Bhushan Power deal; see how much banks recover [details]

In one of the oldest insolvency cases, Bhushan Power deal is finally going through as JSW Steel's bid has received necessary approvals from financial creditors.

JSW Steel's terms to close the long-overdue Bhushan Power & Steel Limited (BPSL) deal is finally happening after over 3 years. The proceedings are taking place after the financial lenders voted in favour of JSW Steel's terms to close the deal as early as this month. As per the agreement of the deal, JSW Steel will deposit the entire Rs 19,350 crore due to financial credits in an escrow account, which will help financial lenders recover over 41 percent of their original claims of Rs 48,000 crore.

According to a CNBC-TV18 report, the lenders were in agreement with JSW Steel's conditions of the escrow arrangement to close the deal as early as possible. JSW Steel had tied certain conditions before releasing the funds to creditors of Bhushan Power, in part to secure indemnity in an event of unfavourable SC ruling in the case, which would then return the entire sum to JSW Steel.

JSW Steel quarterly result — Reuters File

BPSL sale and controversies

The Enforcement Directorate had moved SC to challenge the sale of Bhushan Power to JSW Steel. The ED argued that NCLAT had no jurisdiction to unfreeze and approval the sale of under-investigation assets. The NCLAT had granted immunity to JSW Steel from any prosecution of past offences last year. This clearly did not sit well with the investigating agency, which had attached assets worth over Rs 4,025 crore in connection to the money laundering case linked to an alleged bank loan fraud by former BPSL owners.

Bhushan Power was among the first ones to be flagged by RBI and sent to NCLT for resolution. JSW Steel's bid to acquire Bhushan Power was cleared by NCLT in September 2019, but it has been part of ongoing courtroom hearings ever since.

If the JSW Steel's acquisition goes through, various financial creditors stand to recover over 41 percent of what they had claimed. That is Rs 19,350 crore out of Rs 48,000 crore. Of this, SBI, which is the largest lender to Bhushan Power, stands to recover Rs 4,000 crore against its claims of Rs 9,825 crore, PNB Rs 4399 crore, ARCE ARC Rs 5257 crore, Canara Bank Rs 2244 crore and more, CNBC reported.