MM TAX CLUB

The National Company Law Tribunal (NCLT) admitted insolvency proceeding against ex promoter of BPSL, Sanjay Singal and Aarti Singal. The lead lender state bank of India had filed petition to invoke personal guarantee issued by the promoters for loan taken by Bhushan power and Steel Ltd (BPSL).

Admission of insolvency proceeding is an important steps to recover Rs.12,500/- crore each from Sanjay Singal and Aarti Singal.

The NCLT bench granted interim moratorium on loan and confirmed Reshma Mittal  as the Resolution Professional (RP).Now RP will verify the case and seek final approval from NCLT to start proceeding.

Earlier Sanjay Singal former chairmen of BPCL filed petition before Delhi High court challenging provision of Insolvency proceeding against personal guarantor of corporate debtors. A bench of chief justice D N Patel and Justice Prateek Jalan issued notices to Ministry of Law and Justice and corporate affairs, Insolvency and Bankruptcy Board of India (IBBI) and state bank of India to file their replies on plea filed by petitioner but the court refused to stay on notice issued by SBI to Singal invoking personal guarantee under the IBC provisions.

Bhushan Power and Steel Ltd was the part of dozen cases identified by RBI to be referred to bankruptcy court in 2017. The company had taken loan around Rs.48000/- crore from several banks and financial institutions. Back in July 2019 the company allegedly involved in a fraud amounting to around Rs.3805/- crore. Later Allahabad bank discloses that it had detected a fraud of around Rs.1775/- crore by the company.

Enforcement Directorate (ED) was registered money laundering case against Sanjay Singal promoter of the company and had attached many assets amounting to Rs.4,230/- crore in October 2019 including residential bungalow in Mumbai worth of Rs.199/- crore.

In march 2021, as part of insolvency resolution process the JSW steel acquires BPSL and ready to pay its financial creditors Rs.19,350/- crore against Rs. 48,000/- crore claimed  by the lender of BPSL which leads to 41% recovery of the claim.

Later Sanjay Singal promoter of the company had filed petition in Supreme Court against the lenders accepting money from JSW steel, However the Apex court not stayed the NCLT approval of JSW Steel’s Resolution plan.