Mumbai: Liberty House Group, the UK-based metals company controlled by Sanjeev Gupta, has requested the National Company Law Tribunal (NCLT) to uphold the validity of its bid for Bhushan Power and Steel Ltd.
In a petition to the tribunal, Liberty House claimed that its bid, which was rejected last week without opening, is valid as it was submitted within the 270-day time frame stipulated by the insolvency and bankruptcy code (IBC).
The bid was rejected by the legal team of the interim resolution professional (IRP) without opening as it was submitted on 20 February, much after the 8 February deadline set by the IRP for submission of bids. Liberty House approached NCLT on 22 February following the rejection. The matter will be heard on Monday.
Mahender Khandelwal, the resolution professional for Bhushan Power, declined to comment. Liberty House confirmed the development. “Our request is that at least the bid should be opened and evaluated before being rejected. The law allows for bid submission within the 270-day period from the date of admission of the stressed account for insolvency proceedings and we have done that. In fact, we submitted the bid before other bids were opened," said a spokesperson.
Liberty House has also contended that the committee of creditors should have the ultimate right to reject the bid and not the resolution professional. Two other bidders who submitted the bids for Bhushan Power include JSW Steel Ltd and Tata Steel Ltd. Both had submitted bids before the deadline.
A person familiar with the development on condition of anonymity, said, “The IRP had sent a few queries to Liberty House after they showed interest in bidding for Bhushan Power. Those queries were not responded to. The IRP cannot stop a firm from sending in a bid but it was rejected by the legal team. Liberty House is very well within its rights to approach the NCLT."
Under IBC, cases once admitted are supposed to be resolved within 270 days; if not, companies go into liquidation. During the resolution process, management control is taken away from promoters and vested with a resolution professional.
Bhushan Power, which owes at least Rs37,000 crore to a consortium of lenders led by state-run Punjab National Bank (PNB), is among the 12 large companies identified by the Reserve Bank of India (RBI) for early insolvency resolution.
Mint on 9 February reported that the liquidation value and the fair value for Bhushan Power have been fixed at Rs9,000 crore and Rs24,000 crore, respectively.
The case filed by Liberty House is likely to set a benchmark for other cases. So far, bidding deadlines are not sacrosanct and can be changed by the resolution professional (within the 270-day period), allowing a last-minute entry for a resolution applicant. A direction from the court may offer some clarity on permissibility of a last-minute applicant.