In a significant development today, creditors of Bhushan Power and Steel Ltd (BPSL) are facing a potential clawback of approximately ₹19,350 crore following the Supreme Court’s rejection of JSW Steel’s resolution plan. The court’s decision mandates that these funds be returned within two months, as stipulated in the resolution agreement.

The Supreme Court’s ruling, issued on May 2, 2025, declared JSW Steel’s ₹19,700 crore bid to acquire BPSL as “illegal” and ordered the company’s liquidation. The court cited violations in the payment structure and implementation delays, noting that the Committee of Creditors (CoC) failed to exercise its commercial wisdom and that the Resolution Professional did not discharge duties under the Insolvency and Bankruptcy Code (IBC) with due diligence.

As a result, creditors, including Deutsche Bank, State Bank of India, and Punjab National Bank, are now at risk of having to return the ₹19,350 crore received under the now-invalidated resolution plan. This development has raised concerns about the potential impact on the insolvency process and the broader banking sector.

The Indian government is actively addressing the court’s order. The Department of Financial Services has consulted with lenders and legal experts to analyze the judgment and is finalizing a response.

This ruling has significant implications for the insolvency process in India, potentially deterring future resolution applicants due to the stringent scrutiny of compliance with the IBC.

Sources