Liberty House moves NCLT against Bhushan Power lenders over bid rejection

Sanjeev Gupta-led Liberty House moved National Company Law Tribunal (NCLT) on Monday after the lenders rejected the company’s bid for debt-ridden Bhushan Power & Steel, which owes about Rs 450 billion to its lenders.

The counsel for Liberty House argued that the company’s plan should be considered by lenders and resolution professional as it might have a better offer than the other two resolution applicants. The counsel argued that the plan had been junked without even opening the bid.

Senior counsel Abhishek Manu Singhvi, appearing for Tata Steel, argued “if Liberty’s bid is accepted, one is deliberately giving premium to dishonesty”. He further argued in court that five out of the seven requisite documents were not submitted by Liberty House.

Counsel for resolution professional argued that Liberty’s proposal came much after the expiry of expression of interest invitation in October 2017.

They also argued that the applicant has not submitted a certificate from a chartered accountant.

The next date of hearing is March 5.

The Parliament had passed the insolvency law in 2016 to hold corporate defaulters accountable and assist banks in recovering their dues. Once cases are accepted by the NCLT, lenders to the companies are required to set up a committee for insolvency resolution within 180 days, which can be extended to 270 days, after which the borrowing entity will be liquidated.

Liberty house had placed a plan for Bhushan Power after the bid date as bids were not opened by the lenders on the last date of submission.

Liberty House has shown interest in companies undergoing insolvency resolution in order to have a stronger presence in India. The company had submitted a revised bid for Amtek Auto on February 9.

Liberty House, worth $6.8 billion, has had its eyes set on the difficult but promising Indian market for quite some time now.

For Bhushan Power, Tata Steel is the strongest competitor of Liberty House. Tata Steel has bid aggressively for the asset. Apart form Tata Steel, JSW Steel has also shown interest in the company.

The Committee of Creditors rejected Liberty House’s resolution plan on the grounds that the bid was submitted after the deadline.