JSW Steel Shares Drop 5.7% as Supreme Court Disapproves Bhushan Power and Steel Resolution Plan

JSW Steel shares fell 5.7% to ₹971 on the National Stock Exchange today following the Supreme Court of India's rejection of the company's ₹19,700-crore resolution plan for taking over Bhushan Power and Steel Ltd (BPSL). Not only did the apex court reject the plan as "illegal" and ineligibly cleared by the Committee of Creditors, but also directed immediate liquidation of BPSL. This historic decision puts an end to JSW Steel's years-long quest for BPSL, which was regarded as a strategic acquisition to strengthen its foothold in the domestic steel market.

 

The ruling comes almost four years since JSW Steel's offer was originally approved by insolvency tribunals but had objections raised by the Enforcement Directorate, which claimed that JSW was a "related party" and not eligible for legal immunity in the Insolvency and Bankruptcy Code. The Supreme Court ruled in favor of the ED despite government agency and resolution professional support, creating a precedence for future cases of insolvency and creating fresh doubts for lenders and resolution applicants.

 

The order of liquidation of BPSL brings an end to one of India's most bitter insolvency wars, delivering a severe blow to JSW Steel's growth plans and causing shockwaves in the industry.

 

Source: Moneycontrol