Lenders to debt-ridden Bhushan Power and Steel Limited (BPSL) may see significant recovery from the account in the current quarter if things go as planned, multiple people in the know told CNBC-TV18.

The creditors' committee may hold voting on JSW Steel’s latest proposal to close the deal by March-end soon, said people in the know. In the latest development, JSW Steel wrote a letter to the creditors of the company, proposing to deposit the entire Rs 19,350 crore due to financial creditors as part of its resolution plan in an escrow account, to be released to them subject to certain conditions.

JSW Steel has sought indemnity from the creditors, that in case of any adverse ruling from the Supreme Court in the Bhushan Power matter, lenders will return the entire sum to JSW Steel, said three people directly involved in talks. If lenders agree to the condition, JSW has proposed to transfer the sum to an escrow account and begin the process of taking over Bhushan Power.

The National Company Law Appellate Tribunal had granted immunity to JSW Steel from any prosecution emanating from past offences of the promoters of the company under Section 32A of the Insolvency & Bankruptcy Code last year. However, the Enforcement Directorate had then moved the apex court, arguing that the NCLAT had no jurisdiction to unfreeze and approve the sale of an asset attached by the investigating agency, sought to scrap the sale of BPSL to JSW approved by NCLT in 2019. The ED has attached assets worth over Rs 4,025 crore of BPSL in connection with its money laundering probe linked to an alleged bank loan fraud by the company’s former owners.

“The voting will happen over the next one week, and we are targeting to close this deal for once and for all by March 31st,” said an official from one of the largest lenders to BPSL. Most of the lenders to Bhushan Power are on-board with JSW Steel’s proposal and willing to consider the escrow arrangement to close the deal at the earliest, said this person.

“We are just sorting out issues like how holders of security receipts will return the money which they would have converted into dollars back to JSW Steel if and when the need arises, and so on… By next week we should have answers from most banks and ARCs on whether they are agreeable to close the transaction,” said an executive from a large public sector bank.

JSW Steel is equally keen to close the transaction at the earliest to reap the benefits of the rising steel prices and is awaiting the lenders' response to take ahead the proposed acquisition.

JSW Steel had proposed to repay financial creditors Rs 19,350 crore against their claims of Rs 48,000 crore, entailing a recovery of 41.3 percent, as per its resolution plan. Bhushan Power was one of the first in the list of a dozen defaulters identified by RBI to be sent to NCLT for resolution. The NCLT had cleared JSW Steel's resolution plan for BPSL in Sep 2019, but the case has seen been stuck in courts.

SBI is the largest lender to Bhushan Power and stands to recover over Rs 4000 crore. SBI had admitted claims of Rs 9825 crore against the company, PNB Rs 4399 crore, ARCE ARC Rs 5257 crore, Canara Bank Rs 2244 crore and so on.

First Published:Mar 1, 2021 12:14 PM IST