Bhushan Power, Jyoti Structures resolution to be delayed as IRPs dragged to court
BDO Restructuring Advisory moves court against IRPs Vandana Garg and Mahender Khandelwal to ensure they complete resolution process of Bhushan Power, Jyoti Structures before they leave the firm
Mumbai: The resolution process of Bhushan Power and Steel Ltd and Jyoti Structures Ltd (JSL) is likely to get delayed as consulting firm BDO Restructuring Advisory LLP has dragged its two partners, who are also interim resolution professionals (IRP) of these companies, to court to make sure they serve the mandate before they leave the firm.
Milind Kothari, managing partner of the firm, and BDO have approached the Bombay high court under the Arbitration and Conciliation Act of 1998 against IRPs Vandana Garg and Mahender Khandelwal.
The IRPs along with seven other people are moving to a rival consulting firm. The consulting firm is seeking the court’s intervention to direct the IRPs to resolve the matter through arbitration since the resolution process is expected to be longer than their notice period, said two people familiar with the development.
“Two interim resolution professionals (IRP) had put in their papers in December 2017 but under the partnership agreement they need to complete the six months however now both the professionals are seeking to leave the firm before furnishing their notice period at the time when both the mandates Bhushan Steel & Power as well as Jyoti Structure are very much with the company,” said the first person quoted above, on the condition of anonymity.
The firm is seeking clarity as how the mandates will be serviced since even after the six months of the notice period, statutory time of resolution of 270 days will not be over,” said the first person quoted earlier. “The genesis of the dispute lies in the modification of January 2018 which gives all the authorities to the resolution professionals including raising invoices and bills over consulting firms.”
According to the second person, who spoke to Mint on the condition of anonymity, the issue here is that a resolution professional leaving when insolvency process is going on can create governance issue. “The entire industry is watching this because this will set precedent in other such issues in the future,” said the person.
Kothari along with BDO had approached the court on 7 February and the court will hear the matter on 13 March. Law firm Shardul Amarchand Mangaldas & Co. is advising Kothari and BDO is being represented by law firm Hariani & Co. in the matter, while Garg and Khandelwal are being represented by Sahil Mahajan in the case.
When contacted, Kothari refused to comment on the development since the matter is sub-judice. While Ameet Hariani, managing partner of law firm Hariani & Co., who is representing BDO, had also confirmed the development.
“Since the matter is sub-judice before the court and hence it would not be proper to comment on the factual aspect of the matter,” said Garg in an email response.
Khandelwal also declined to comment, but added, “However, I may clarify that as far as my assignment as insolvency professional is concerned, I shall continue to discharge the same as per the mandate given to me.”
Bhushan Power & Steel owes around Rs37,000 crore to a consortium of lenders, while Jyoti Structures has a total debt of around Rs7,000 crore. Both the companies were part of the initial list of the 12 companies for which the Reserve Bank of India had asked banks to approach the bankruptcy court to recover dues.
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