The Knight in Shining Armour: JSW Steel Ltd’s Acquisition of Bhushan Power and Steel Ltd

Abstract

This case revolves around the acquisition of Bhushan Power and Steel Ltd (BPSL) by JSW Steel Ltd BPSL faced severe financial difficulties, prompting its lenders, including prominent Indian banks, to initiate insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code in 2019. JSW Steel Ltd entered the competition to acquire BPSL’s assets and secured the bid. However, complications arose as the Enforcement Directorate and BPSL’s promoters raised objections, leading to delays in the insolvency process. The case spotlights a significant Indian corporate reform represented by the Insolvency and Bankruptcy Code and the establishment of the National Company Law Appellate Tribunal (NCLAT). This reform proved essential as it provided an alternative to distressed companies, which previously had no choice but to cease operations, adversely affecting both employees and lenders. The NCLAT has since introduced a win-win solution for most stakeholders. Furthermore, the case delves into the crucial characteristics of the steel industry, an indispensable product utilized across various global industries, and how these features significantly impact strategic decision-making. It underscores the strategic value of JSW Steel Ltd’s acquisition of a struggling company. In summary, it offers a comprehensive perspective on the insolvency process, the roles of the NCLAT and Enforcement Directorate, and the value generated through the acquisition.