NCLT clears bankruptcy proceedings against former promoters of Bhushan Power and Steel

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The main bench of the National Company Law Tribunal (NCLT) has cleared the State Bank of India’s petition to initiate insolvency proceedings against the former promoter of Bhushan Power and Steel (BPSL) Sanjay Singhal and his wife Aarti Singhal The creditors seek Rs 12,000 crore in insolvency proceedings against them, sources say DH.

This is done by invoking the personal guarantees given by Sanjay Singhal and Aarti Singhal. SBI had filed a request through the resolution
professional.

According to the Insolvency and Bankruptcy Code (IBC), lenders can take on former promoters or any guarantor of the debtor company to collect their contributions.

JSW bought Bhushan Power and Steel for Rs 19,350 crore earlier this year, ending three years of uncertainty over distressed assets.

As a result of the resolution, lenders to the company were required to make 41 percent of their dues.

JSW funded the transaction through a combination of equity and debt. As part of the payment, Rs 8,614 crore in Piombino Steel (PSL) was arranged through a mix of equity, convertible option instruments and debt.

Of this amount, Rs 8,550 crore was invested in a special purpose vehicle (SPV), Makler, the bidding company.

The remaining 10,800 crore was financed by debt.

Some prominent banks had exposure to the company, like State Bank of India which had exposure of Rs 9,825 crore while PNB had exposure of Rs 7,355 crore.

The company was brought under the insolvency and bankruptcy code after failing to pay its contributions.

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