National Company Law Appellate Tribunal (NCLAT) on Friday gave a go-ahead to the lenders’ meeting for finalising a bid for BPSL

A day after Monnet Ispat got final nod its NPA resolution, lenders of bankrupt company Bhushan Power & Steel also got a go-ahead for finalising a bid for the company. Tata Steel, Liberty House and JSW Steel have submitted the bids for the company, and it is up to the committee of creditors (CoC) to choose one of them under the Insolvency and Bankruptcy Code (IBC).

News agency PTI reported that the National Company Law Appellate Tribunal (NCLAT) on Friday gave a go-ahead to the lenders’ meeting for finalising a bid for the company. Bhushan Power & Steel (BPSL) was among the Reserve Bank of India’s Dirty Dozen accounts comprising 25% of India’s total non-performing assets, identified for an immediate resolution last year. The company owes about Rs 37,248 crore to lenders.

Interestingly, BPSL’s sister company, Bhushan Steel, was the first account to be resolved under the IBC and was acquired by Tata Steel. In this case, however, Tata Steel’s bid is reportedly lower than Liberty House but higher than JSW Steel. Liberty House, which is the highest bidder, was also a late bidder, however, got a go-ahead from insolvency court. The NCLAT has asked the CoC to consider the best of three plans, not just the highest bidder, as per section 30(2).

Of the 12 big accounts, two accounts, Bhushan Steel and Electrosteels Steel, have been resolved; Monnet Ispat has got the final official nod for the sole bid submitted by AION Capital-JSW Steel consortium; In Alok Industries’ case, Reliance Industries-JM Financial ARC have emerged highest bidder; other seven accounts are at different stages of resolution. So far, the steel industry has witnessed the most successful resolution.

The IBC law was brought in to streamline the NPA resolution mechanism to resolve India’s banking crisis, which escalated after 2015 due to rapid credit growth during 2006-2011. To give more teeth to the law, the RBI was vested with the additional power to identify and start the resolution process against biggest NPA accounts. In June last year, the RBI identified 12 accounts, followed by 28 more accounts in December 2017.

In February, the RBI struck-off a dozen resolution mechanism and came up with one uniform framework for identification and resolution of NPAs in tandem with the IBC law. Under this framework, there’s a strict 180-day deadline for resolution of outstanding loans, failing which companies will face insolvency proceedings under the IBC law.