NCLT allows insolvency proceedings against Bhushan Steel, Bhushan Power
New Delhi: The National Company Law Tribunal on Wednesday allowed banks to initiate insolvency proceedings against Bhushan Steel and another firm, Bhushan Steel and Power.
The petition for launching the insolvency process was filed by State Bank of India (SBI), the lead bank of the consortium of lenders, in the case of Bhushan Steel while a similar plea was filed by Punjab National Bank (PNB) against Bhushan Steel and Power.
Since the plea has been admitted by the NCLT, there is a 180-day timeline to decide on a resolution plan in accordance with the Insolvency and Bankruptcy Code (IBC), 2016.
SBI has claimed recovery of Rs4,295 crore from Bhushan Steel and $490 million for foreign currency loan.
The NCLT, on 13 July, issued notices to Bhushan Steel as well as Bhushan Steel and Power over insolvency proceedings initiated by their lenders SBI and PNB.
The companies were directed to file their reply. Both the petitions were filed under the Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, where the financial creditor initiates insolvency proceedings with a claim.
After hearing both the parties, the tribunal had kept its order reserved for 19 July.
Bankruptcy proceedings have also been initiated against other companies, including Electrosteel Steel and Lanco Infratech, Alok Industries and Jyoti Structures, which are among the 12 NPA or bad loan cases identified by the Reserve Bank of India (RBI). The 12 accounts alone constitute a quarter of the over Rs8 lakh crore of NPAs. Of the total, Rs6 lakh crore are with public sector banks alone.
The internal advisory committee (IAC) of the RBI, after its meeting on 13 June, had recommended 12 accounts representing about 25% of gross NPAs of the banking system for immediate reference under the IBC. These accounts have an exposure of more than Rs5,000 crore each, with 60% or more classified as bad loans by banks as of March 2016.
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