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In the insolvency case of Bhushan Steel and Power Company, JSW Steel Company emerged as the highest bidder for a payment of Rs. 19,350 crore. Meanwhile, the Enforcement Directorate was found to have attached assets of Bhushan Steel Company worth Rs. 4,025 crore owing to a money-laundering case in which Bhushan was found guilty by the Enforcement Directorate.
Thereafter, the National Company Law Appellate Tribunal (NCLAT) took a stand against this act of Enforcement Directorate attaching the assets of Bhushan Steel and said that the agency cannot attach a company’s assets which is still undergoing a case before the National Company Law Tribunal (NCLT) and that too without the permission of the adjudicating authority under Insolvency and Bankruptcy Code, 2016 (IBC) i.e. the National Company Law Tribunal. The Ministry of Corporate Affairs directed the Appellate Tribunal to pass and order regarding the same thing and also said that if the Enforcement Directorate starts attaching the assets the very function of the Insolvency Code would fail.
In this case out of the total debt to the financial creditors of Bhushan Steel Company which amounted to Rs. 47,158 crore, Rs. 19,350 crore was to be paid by JSW Steel as it was its highest bidder. Another debt to the operational creditors which amounted to Rs. 350 crore was also to be paid by JSW Steel out of a total debt of Rs. 733 crore.
Though the Enforcement Directorate has the rights to conduct investigation in any case but attaching assets of a company which is already undergoing a debt-resolution case is not justified that too for the actions of the previous promoters of the company. Also, the assets attached by the Directorate were already sold to the buyer i.e. JSW Steel. This act would defeat the very purpose of the Insolvency Code.
There are several other companies which are undergoing debt-resolution process under the IBC and one or the other key managerial personnel of these companies are fighting other cases as well. The fear of the assets of these companies being attached by the Enforcement Directorate would push away other companies or individuals from submitting any bid for them.
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