India’s insolvency tribunal NCLAT paves the way for JSW Steel’s acquisition of Bhushan Power and Steel (BPSL) by granting JSW immunity against criminal prosecution by the Enforcement Directorate (ED).
In October, the ED had attached Rs4,025 crore assets of BPSL, including building, machinery and land, under the Prevention of Money Laundering Act (PMLA), as part of its investigations against the erstwhile promoters of the company for diversion of funds. The attachment of the property led to a stay of BPSL’s insolvency proceedings. Following this, JSW demanded immunity from liabilities or litigation that may rise from the prosecution of BPSL’s promoters.
BPSL entered insolvency after it failed to service its total debt of around Rs47,000 crore. In the insolvency proceeding, JSW Steel emerged as the successful applicant to acquire BPSL with a bid of Rs19,700 crore bid. In December, India’s Insolvency and Bankruptcy Code (IBC) was amended to provided immunity for the bidders of stressed assets from criminal investigation to speed up debt resolution plans through Section 32A. The ED argued that PMLA overrides the IBC and that Section 32A cannot be used retrospectively.