Bhushan Power insolvency process hits creditor wall

Insolvency process for Bhushan Power and Steel has hit a fresh hurdle.

A legal case between the troubled steel maker and its creditor, a Singapore-based shipping chartering service provider, may upset the whole process.

This week a court will hear whether the moratorium declared under Insolvency and Bankruptcy Code (IBC) would be applicable in settling the dues of the chartering company.

The creditor has won a foreign arbitration award against Bhushan Power and Steel and wants it to be enforced under a different Act.

"Counsel appearing on behalf of the award-holder (Jaldhi Overseas Pte Ltd) submits that the order does not prevent this court from deciding the question of enforceability of the award and has, accordingly, requested the Court to hear the application under Section 48 of the Arbitration and Conciliation Act, 1996 on merits," Judge Soumen Sen has said.

The order here refers to the judgement of the National Company Law Tribunal (NCLT) in July by which a moratorium was declared under Section 13(2) of the IBC.

Bhushan has argued that in view of the NCLT order, Kolkata High Court can no longer proceed with the enforcement of the arbitration award and would make a submission on Thursday with regard to the jurisdiction of the high court to hear the application under Arbitration and Conciliation Act.

Jaldhi has argued that admission of Bhushan under IBC can't prevent the court from deciding on the whether the foreign arbitration award can be enforced.

In a recent ruling, a court had allowed a creditor to take away equipment from the possession of defaulting steel company Ramsarup Industries despite the company applying under the Insolvency and Bankruptcy Code, DNA Money had reported.

The court had ruled that pendency of the application under IBC can't be an excuse for not returning assets.

Both listed entities Bhushan Steel as well as Bhushan Power and Steel, with the debt of Rs 37,000 crore, are part of the list of 12 large defaulters referred by the Reserve Bank of India to banks for insolvency action under at NCLT.

Following acceptance by NCLT, several global funds including Bain, Oaktree and Aion Capital partners are reportedly eyeing the assets of the group.

...& ANALYSIS

• This week a court will hear whether the moratorium declared under IBC would be applicable in settling the dues of the Bhushan Power creditor
   
• The creditor has won a foreign arbitration award against Bhushan Power and Steel and wants it to be enforced under a different Act