By Indu Bhan

Copyright indiatimes

The Supreme Court on Friday overturned its May 2 order directing liquidation of Bhushan Power and Steel Ltd (BPSL) and instead upheld JSW Steel Ltd’s Rs 19,700 crore resolution plan for the debt-ridden company. With this verdict, SC effectively rejected challenges raised by BPSL’s former promoters and certain creditors.The apex court observed that delays in implementation were not attributable to either JSW or the lenders’ Committee of Creditors (CoC), observing that both had been trying to enforce the plan despite hurdles.A bench led by Chief Justice B. R. Gavai said the commercial wisdom of the CoC could not be interfered with and cautioned that once a resolution plan is approved, reopening claims would amount to “committing violence” on the provisions of the Insolvency and Bankruptcy Code (IBC). It also clarified that Compulsorily Convertible Debentures (CCDs) issued by JSW as the successful resolution applicant are to be treated as equity.While noting that former promoter Sanjay Singhal and others had a locus in the matter, the top court said their conduct showed that the “entire attempt” had been to prevent the Corporate Insolvency Resolution Process (CIRP) from reaching its logical end. It underlined that the CoC continues to exist until the resolution plan is fully implemented.Live EventsChief Justice Gavai further observed that JSW had already invested heavily in modernising the corporate debtor, turning BPSL into a profit-making entity. “The very purpose for which the IBC was enacted has not only been achieved but the corporate debtor has now become a profit-making company. Can JSW be penalised for making it so?” he said.JSW Steel-BPSL saga: SC warns against reopening settled issuesSC also warned of the “disastrous results” that could have followed had it accepted the arguments of the former promoters or the CoC regarding distribution of earnings before interest, tax, depreciation and amortisation (EBITDA). It noted that neither the Request for Resolution Plan (RfRP) nor JSW’s plan provided for treatment of EBITDA, and allowing such claims to be raised belatedly would open a Pandora’s Box, undermining the finality of the IBC framework.Referring to its earlier Essar Steel ruling, the bench underlined that a successful resolution applicant cannot be forced to deal with claims that are not part of the RfRP or the approved resolution plan. It said that if losses had continued instead of profits, the corporate debtor could not have sought a refund, and similarly, creditors cannot now claim profits outside the plan.Moreover, the apex court said there was no merit in the objections of either the former promoters or the CoC on the issue, emphasising that accepting such contentions would frustrate the very purpose for which the IBC was enacted.JSW Steel vs former BPSL promoters: How the matter reached SCThe insolvency proceedings against Bhushan Power and Steel Limited (BPSL), a debt-ridden company, began under the Insolvency and Bankruptcy Code (IBC) in 2017. JSW Steel Limited emerged as the successful resolution applicant with a Rs 19,700 crore bid, which was approved by the National Company Law Tribunal (NCLT) in 2019. However, the plan was delayed due to multiple litigations, including the Enforcement Directorate’s attachment of BPSL’s assets in connection with alleged fraud by its former promoters. These attachments were eventually lifted in December 2024.On May 2, 2025, a Supreme Court bench led by Justice Bela M. Trivedi ordered liquidation of BPSL and set aside JSW Steel’s resolution plan. The court criticised the conduct of the committee of creditors (CoC), the resolution professional, and the NCLT, terming it a “flagrant violation” of the IBC framework. This was a major setback for JSW Steel and the CoC, as liquidation would have meant dismantling the Rs 19,700-crore resolution plan.Subsequently, on July 31, 2025, a special bench headed by Chief Justice B. R. Gavai recalled the May 2 order and agreed to rehear the matter. The court revived as many as five related pleas to examine afresh the validity of JSW’s resolution plan, the role of the CoC, and the objections raised by the former promoters of BPSL.One of the central disputes was whether the earnings before interest, tax, depreciation and amortisation (EBITDA) generated during the resolution period—amounting to about Rs 3,569 crore—should accrue to the creditors or remain with the company. In addition, the CoC sought Rs 2,500 crore in delay-related interest, arguing that implementation of the resolution plan was stalled. JSW Steel, on the other hand, maintained that it bid for BPSL on an “as is, where is” basis, and that the delays were caused by the asset attachment case.Add as a Reliable and Trusted News Source Add Now!
On August 8, 2025, the CoC opposed the plea by BPSL’s former promoters, questioning its maintainability. Then, on August 11, 2025, after extensive arguments by the CoC, JSW Steel, and the former promoters, the Supreme Court reserved its verdict in the case.(You can now subscribe to our Economic Times WhatsApp channel)

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(You can now subscribe to our Economic Times WhatsApp channel)Read More News onSupreme CourtJSW SteelBhushan Power and Steel LtdInsolvency and Bankruptcy CodeJSW Steel LtdEnforcement DirectorateNational Company Law TribunalCommittee of Creditorsjsw steelsinsolvency(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless