In India, the former promoters of Bhushan Power and Steel Ltd (BPSL) are urging the Supreme Court to allow a fresh insolvency process instead of liquidation. This follows the court’s May 2 decision rejecting JSW Steel’s resolution plan and directing liquidation proceedings to begin.In India, the former promoters of Bhushan Power and Steel Ltd (BPSL) are urging the Supreme Court to allow a fresh insolvency process instead of liquidation. This follows the court’s May 2 decision rejecting JSW Steel’s resolution plan and directing liquidation proceedings to begin.
The ongoing legal dispute surrounding Bhushan Power and Steel Ltd (BPSL) intensified as the company’s former promoters presented their arguments before a Special Bench of the Supreme Court, urging the initiation of a fresh Corporate Insolvency Resolution Process (CIRP) instead of proceeding with liquidation. The review hearing follows a landmark ruling on May 2 that not only rejected JSW Steel’s resolution plan but also directed the National Company Law Tribunal (NCLT) to begin liquidation proceedings under the Insolvency and Bankruptcy Code (IBC).
Supreme Court Review Pivotal for BPSL’s Future
The former promoters, represented by senior legal counsel, emphasized that liquidation should be treated as a last resort, especially considering the scale and performance of BPSL. They argued that a flawed resolution plan should not automatically trigger liquidation but should instead lead to a renewed CIRP that ensures maximized asset recovery and continued business operations.
The court had earlier invoked Article 142 of the Constitution, citing the “flagrant violation” of the IBC and the CIRP regulations. It concluded that the resolution professional had failed to uphold his statutory obligations throughout the process. Consequently, the Supreme Court had ordered liquidation, sparking wide debate in India’s corporate legal and financial community.
Also Read: Supreme Court Reopens Bhushan Steel Case: What It Means for IBC
Status Quo Maintained Temporarily Amid Legal Challenge
Following its May 2 verdict, the apex court ordered a status quo on May 26 in liquidation proceedings, acknowledging the complexity of the case and allowing time for review. This temporary relief has kept BPSL’s operations intact, including its significant employment base and rising production capacity—growing from 2.5 to 4.5 million metric tonnes annually and supporting approximately 25,000 workers.
JSW, which had submitted the resolution plan, underscored the need for stability and transparency in resolution outcomes, given BPSL’s reported turnover of ₹28,000 crore (~USD 3.3 billion) in a single fiscal year. The legal deadlock has not only delayed potential acquisition but also raised concerns about the efficacy of India’s insolvency resolution framework.
Industry Perspective: Experts Warn Against Precedent Risks
Industry experts caution that the Supreme Court’s strict interpretation, while reinforcing regulatory discipline, could dissuade future resolution applicants due to unpredictability and prolonged legal risk. In high-value distressed asset cases, continuity of operations often remains a priority for economic stability, job protection, and creditor value maximization.
Legal analysts note that if liquidation proceeds without exhausting all resolution possibilities, it could affect investor confidence in India’s insolvency architecture. They argue that CIRP aims for revival, not closure, and any deviation must be scrutinized for long-term systemic impact.
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