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Supreme Court on May 2 rejected JSW Steel's resolution plan for Bhushan Power and Steel Ltd (BPSL) and directed for its liquidation, reported CNBC-TV18.

The apex court said JSW Steel's Committee of Creditors (CoC) plan for Bhushan Power was illegal and should not have been accepted by CoC.

The apex court's ruling cited two key reasons for its decision: JSW’s use of a mix of equity and optionally convertible debentures (OCDs) to complete the takeover — when it should have been executed only through equity — and a failure to implement the plan within the timeframe mandated under insolvency law, the channel reported.

At 11:58 am on May 2, JSW Steel's shares on BSE were trading nearly 6% lower at Rs 971 apiece.

JSW Steel had emerged as the successful resolution applicant with its Rs 19,700-crore bid for BPSL.

Earlier this year, the Delhi High Court had set aside the money laundering proceedings against BPSL.

In a prosecution complaint in 2020, the Enforcement Directorate named BPSL as an accused along with the erstwhile chairman and managing director who were allegedly involved in the offence of money laundering in relation to a bank fraud to the tune of Rs 47,000 crore.

BPSL was dragged to insolvency by lenders led by Punjab National Bank (PNB) after the company failed to pay loans within the stipulated time-frame. It had Rs 47,158 crore of admitted claims.

BPSL was in the first list of 12 companies by the RBI, against whom the banking regulator had directed banks to file insolvency in the NCLT. It was auctioned to recover Rs 47,158 overdue loans.

PNB is expecting to recover a substantial Rs 3,800 crore from BPSL under debt resolution in NCLT, which will help it achieve the target of Rs 8,000 crore cash recoveries during this fiscal, its managing director and CEO S S Mallikarjuna Rao said earlier this year.

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