Bhushan Power & Steel: SBI moves NCLT to initiate CIRP against singles

JSW Steel closed the acquisition of BPSL in March this year for Rs 19,350 crore.

NS state Bank of India (State Bank Of India) has filed a petition in the National Company Law Tribunal (NCLT) seeking initiation of insolvency proceedings against Sanjay Singhal and Aarti Singhal, former promoters of Bhushan Power and Steel (BPSL).

Both were personal guarantors for loans worth Rs 12,276 crore provided to the steel firm through various facilities from time to time since June 2009. Of the total outstanding loans, Rs 9,648 crore was term loans and the rest was working capital loans, but the steelmaker defaulted on payments, SBI said in its application.

Bishwajit Dubey, partner of Cyril Amarchand Mangaldas, appeared on behalf of SBI in the Principal Bench of NCLT in New Delhi on Tuesday. NCLT has issued notice to singles. SBI has designated Reshma Mittal as the resolution professional in the resolution process.

In its application, SBI said the bank had provided the loan with its now-amalgamated subsidiaries State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore. The subsidiaries have been amalgamated with SBI with effect from 1st April, 2017.

JSW Steel In March this year, it closed the acquisition of BPSL for Rs 19,350 crore.

The Center had notified rules on November 15, 2019 holding corporate guarantors liable for loans received by their companies, which subsequently failed to pay and went into resolution proceedings under the IBC.

Later in May 2021, the Supreme Court held that the approval of a resolution plan does not actually discharge the individual guarantor (of the corporate debtor) of its liabilities under the contract of guarantee.