Tata Steel has earned a huge profit which was made by Bhushan Steel during its insolvency proceedings over the past eighteen months. Whereas the National Company Law Tribunal has ordered that all the profits thus earned by Bhushan Steel shall be kept for the financial and operational creditors of the company.
JSW Steel, who was the winning bidder of Bhushan Power, has approached National Company Law Appellate Tribunal (NCLAT) against the ruling of the National Company Law Tribunal (NCLT).
Bhushan Steel had total current assets worth Rs. 7,909 crore and its total current liabilities were Rs. 2,742 crore dated May 18, 2019. Therefore Tata Steel has earned current assets worth Rs. 5,167 crore after the insolvency proceedings of the former company. Bhushan Steel had inventories worth Rs. 4,219 crore and bills receivables worth Rs. 1,288 crore when the company was taken over by Tata Steel. Tata Steel has also acquired non-current assets other than fixed assets worth Rs. 2,028 crore and non-current liabilities worth Rs. 97 crore. Thus in total, Tata Steel has earned total non-current assets of Rs. 1,931 crore.
Thus ever since Tata Steel placed a bid of Rs. 35,000 crore to acquire Bhushan Steel, the latter has gained Rs 7,099 crore. Even though Insolvency and Bankruptcy Code 2016 offers a time-bound insolvency resolution process, the Committee of Creditors (CoCs) did not make any claim on the profit earned by the insolvent companies in earlier cases.
In the case of Bhushan Steel, the profit earned by the company during its insolvency process could not be brought before the court for scrutiny as the initial process document which was issued by the Committee of Creditors could not be modified after the proceedings were complete.
However, the CoC have made a claim on the profits earned by Essar Steel as the insolvency process of the company was delayed because it had moved various courts to skip the insolvency process.