Tribunal Approves Tata Steel's Resolution Plan for Bhushan Energy Ltd. Despite Ex-Promoter Objections

The Tribunal approved the resolution plan submitted by Tata Steel Limited for Bhushan Energy Ltd., despite objections raised by the Ex-Promoter regarding biased conduct, lower valuation, and Tata Steel Ltd.'s eligibility under Section 29A of the Insolvency and Bankruptcy Code. The approval included conditions such as priority payment to operational creditors and adherence to applicable laws. The Monitoring Agency was appointed, and the Board of Directors' powers were suspended until the closing date. The resolution plan was deemed binding on the Corporate Debtor and its stakeholders.

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Issues Involved:
1. Approval of the resolution plan under Section 30(6) & 31 of the Insolvency and Bankruptcy Code, 2016.
2. Objections by the Ex-Promoter regarding biased conduct, lower valuation, and ineligibility of Tata Steel Ltd. under Section 29A of the Code.
3. Compliance with the Insolvency and Bankruptcy Code and associated regulations.
4. Appointment of the Monitoring Agency and suspension of the Board of Directors' powers.
5. Reliefs and concessions sought under the approved Resolution Plan.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan:
The Tribunal addressed the application filed by the Resolution Professional (RP) seeking approval of the resolution plan submitted by Tata Steel Limited (TSL) for Bhushan Energy Ltd. (the Corporate Debtor). The RP had convened 10 meetings of the Committee of Creditors (COC) and received claims amounting to INR 2779.94 crores from financial creditors and INR 98.20 crores from operational creditors. The RP issued a public notice inviting resolution plans, receiving interest from TSL and JSW Energy Limited. After extensive negotiations and evaluations, TSL's amended and restated resolution plan was approved by the COC with a 100% affirmative voting share. The RP confirmed compliance with all provisions of the Code and Regulations.

2. Objections by the Ex-Promoter:
The Ex-Promoter raised three main objections:
- Biased Conduct: Alleging collusion between the RP and TSL, citing non-disclosure of pending litigation before the Supreme Court concerning Power Purchase Agreements (PPA) between Bhushan Steel Ltd. and Bhushan Energy Ltd.
- Lower Valuation: Arguing that the termination of PPAs deliberately reduced the fair market value of the Corporate Debtor. The Ex-Promoter claimed that TSL's offer of INR 730 crores was significantly lower than the actual value of the Corporate Debtor's assets.
- Ineligibility under Section 29A: Asserting that TSL was ineligible to submit a resolution plan due to its subsidiary, Tayo Rolls Ltd., being an undischarged insolvent.

3. Compliance with the Code and Regulations:
The RP submitted a compliance certificate in Form-H, confirming that the resolution plan complied with all provisions of the Code and Regulations. The RP and COC obtained affidavits from TSL affirming its eligibility under Section 29A of the Code. The Tribunal noted that the term "undischarged insolvent" applies to individuals and not corporate entities, rejecting the Ex-Promoter's argument about TSL's ineligibility.

4. Appointment of Monitoring Agency and Suspension of Board Powers:
The Tribunal approved the appointment of the Monitoring Agency, comprising the RP and the COC, to oversee the implementation of the resolution plan. The powers of the Board of Directors of the Corporate Debtor were suspended until the closing date, and the Monitoring Agency was authorized to perform necessary acts to implement the resolution plan.

5. Reliefs and Concessions Sought:
The Tribunal addressed various reliefs and concessions sought under the resolution plan, including:
- Priority payment to operational creditors over financial creditors as per Regulation 38(1).
- Approval of the reduction of share capital of the Corporate Debtor.
- The Tribunal did not grant requests for statutory reliefs but allowed the resolution applicant to approach competent authorities for necessary approvals.
- The Tribunal emphasized adherence to all applicable laws and regulations.

Conclusion:
The Tribunal approved the resolution plan submitted by TSL, overruling the objections raised by the Ex-Promoter. The approval was subject to certain conditions, including priority payment to operational creditors and adherence to applicable laws. The Tribunal appointed the Monitoring Agency and suspended the powers of the Board of Directors until the closing date. The resolution plan was deemed binding on the Corporate Debtor, its creditors, guarantors, members, employees, and other stakeholders.

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