ED action against Bhushan Power assets vindicates JSW Steel’s fears

After the Enforcement Directorate (ED) attached assets of Bhushan Power and Steel (BPSL) Ltd in an alleged bank fraud, JSW Steel Ltd said the probe agency’s action has vindicated its stand to seek immunity from criminal proceedings in the ongoing probe.

JSW Steel had in September moved National Company Law Appellate Tribunal (NCLAT) seeking immunity from criminal proceedings in the ongoing bank fraud investigation against erstwhile promoter of BPSL. The appellate tribunal will hear JSW Steel’s plea on Monday

“It vindicates JSW Steel stand of seeking immunity from attachment of properties of corporate debtor (BPSL). This may happen even in cases where the control is changed under IBC,” the company’s joint managing director and group chief financial officer Seshagiri Rao said in a statement.

ED on Saturday attached assets worth ₹4,025 crore of BPSL in connection with an alleged bank loan fraud, which is undergoing investigation under the Prevention of Money Laundering Act (PMLA), 2002.

JSW Steel had in September acquired debt-ridden BPSL under the Insolvency and Bankruptcy Code (IBC) with an offer of ₹19,700 crore. While financial creditors will recover ₹19,350 crore, or 41% of their total admitted claims of ₹47,158 crore. Operational creditors will get ₹350 crore of their admitted claims of ₹734 crore.

Approving JSW Steels’s bid for BPSL, the National Company Law Tribunal (NCLT) had said criminal proceedings against the erstwhile promoter of BPSL, Sanjay Singhal, would not impact the implementation of JSW Steel’s resolution proposal.

Despite NCLT’s assurance, ED has attached the assets of BPSL where erstwhile promoter has been allegedly involved in siphoning off funds amounting to ₹5,600 crore as reported by state-owned Punjab National Bank and Allahabad Bank.

The probe agency said it has attached immovable properties--land, building, plant and machinery--of BPSL located in Odisha. While this is the first such attachment in the probe, the agency is likely to continue further attachment of assets.