The NCLAT has asked Tata Steel, the resolution professional and Committee of Creditors to respond within seven days, on allegations by Neeraj Singhal that the Tata company's takeover of Bhushan Steel is against the Insolvency and Bankrupcty Code (IBC).
Post announcement on Friday, the share price of Bhushan Steel soared by 4.93% to Rs 27.65 per piece on BSE.
Kumar said following the Bhusan Steel buyout, public sector banks (PSBs) will write back Rs 7,500 crore of loans which were earlier classified as NPAs. "Lenders recovered nearly entire principal loan of Bhushan Steel through Rs 36,400 cr transparent bid by Tata Steel and also got 12% stake in the company".
Bamnipal Steel Ltd (BNPL), a wholly-owned subsidiary of Tata Steel, has successfully completed the acquisition of controlling stake of 72.65 per cent in Bhushan Steel Ltd (BSL) for around Rs 36,400 crore.
Goyal, who is holding the charge of Finance Ministry temporarily, further said that it is for the first time such a large loan resolution has been achieved through upfront payment received by banks through sale of a company.
"Cleaning up banks and resolving NPAs is part of Congress-mukt Bharat (Congress-free India)".
However, insolvency proceedings were taken against the company on 26 July 2017 under the Insolvency and Bankruptcy Code, 2016 and the company suffered a lot.
Settlement of amounts equivalent to Rs.35,200 crore towards financial creditors of Bhushan Steel is being undertaken as per the terms of the resolution plan.
Tata Steel sees opportunities for synergy with Bhushan Steel, which it acquired under the corporate insolvency resolution process, a top company official said today.
"The investment from BNPL in BSL has been done through a combination of equity of Rs158 crore and inter-corporate loan of Rs34,963 crore". Additionally, ₹100 crore has been paid by BNPL to the financial creditors of BSL as consideration for novation of remaining financial debt of BSL.
A Tata Steel unit sold Rs5,000 crore of three-month commercial paper to also help fund the Bhushan asset purchase, separate people familiar with the matter said on Wednesday.
"The acquisition is being financed through a combination of external bridge loan of Rs16,500 crore availed by BNPL and balance amount through investment by Tata Steel in BNPL".