New Delhi: The Supreme Court on Friday ordered the liquidation of Bhushan Power and Steel Ltd (BPSL), rejecting JSW Steel’s resolution plan for the bankrupt company.
The apex court held that the ₹19,700-crore resolution plan submitted by JSW Steel was illegal and contrary to the provisions of the Insolvency and Bankruptcy Code (IBC).
The court said the resolution plan should not have been approved by the Committee of Creditors (CoC) and invoked its extraordinary powers under Article 142 of the Constitution to direct BPSL’s liquidation.
This marks the second time in recent months—after Jet Airways—that the Supreme Court has ordered the liquidation of a major insolvent company by exercising these constitutional powers.
A detailed order is awaited.
JSW Steel had proposed to pay ₹19,350 crore to financial creditors, amounting to nearly a 60% haircut, and ₹350 crore to operational creditors against their admitted claims of ₹733 crore.
BPSL was one of the 12 large non-performing assets (NPAs) identified by the Reserve Bank of India in 2017 for insolvency resolution under the IBC. At the time, it owed more than ₹47,000 crore to lenders and over ₹780 crore to operational creditors. The unwinding of this transaction is expected to significantly impact major banks, including the State Bank of India and Punjab National Bank, which led the Coc in the case.
The company’s troubles were compounded by a high-profile investigation by the Enforcement Directorate (ED) into its former promoters, who allegedly diverted ₹4,025 crore in bank loans.
In October 2019, the ED provisionally attached BPSL’s assets under the Prevention of Money Laundering Act (PMLA), identifying them as proceeds of crime. These attachments had been a central legal issue delaying the acquisition process.
In December 2024, the Supreme Court had ordered the ED to release the attached assets worth over ₹4,000 crore, which the agency had seized during its probe. Despite this, the ED continued to argue that JSW Steel was a related party, citing its minority stake in a separate joint venture with BPSL.
With this ruling, one of India’s longest-running and most-watched insolvency cases has come to a close, albeit with liquidation, not resolution.
At 1240 pm, shares of JSW Steel were at ₹962 on the National Stock Exchange, down 6.5% from the previous close.
