Supreme Court's Review of Bhushan Power & Steel Ltd Case
The Supreme Court recently reviewed its May 2 judgment declaring the resolution plan for Bhushan Power & Steel Ltd (BPSL) illegal, ordering its liquidation. This case highlights crucial issues in the Insolvency and Bankruptcy Code (IBC) framework.
Key Concerns with the May 2 Judgment
- The judgment provoked concern among stakeholders and policymakers as it challenged the basis of the IBC, potentially affecting economic stability.
- It emphasized the significance of the ₹20,000 crore investment by JSW Steel and the associated job stakes.
- The commercial wisdom of the committee of creditors, validated by the NCLT and NCLAT, should not be undermined.
Implications and Required Actions
- The government should not disregard the original judgment and must enhance the bankruptcy process by addressing its shortcomings.
- Reviewing the entire process can prevent future issues and bolster the IBC's implementation as a critical reform.
- There is a need to tackle capacity issues within the NCLT and NCLAT to ensure efficient adjudication of bankruptcy cases.
Efficiency of the Insolvency Process
- The Parliamentary Standing Committee on Finance suggests establishing dedicated NCLT and NCLAT to expedite insolvency resolutions.
- Current data shows that cases with resolution plans take an average of 597 days, while liquidation cases take over 500 days, indicating a need for process acceleration.
- Delays in the resolution process can erode value, making it crucial to finalize bankruptcy proceedings promptly.