State Bank of India has issued a notice to Bhushan Power and Steel Limited’s (BSPL) promoters to invoke their personal guarantee for unpaid loans taken by the bankruptcy company, two people familiar with the matter told CNBC-TV18.

The notice dated August 31 has been sent to Sanjay Singhal, promoter of Bhushan Power & Steel, under the Indian Contract Act 1872, said a banking executive in the know. State Bank is looking to invoke the promoter’s personal guarantee for Rs 12,276 crore of loan defaults by BSPL, one fo the people quoted earlier added.

JSW Steel has been identified as the highest bidder for BSPL under the Insolvency and Bankruptcy Code-led resolution, with an offer of Rs 19,700 crore. However, the proposed takeover is pending a Supreme Court ruling on several matters relating to the case, including ring-fencing the acquirer from offenses committed by the company’s promoter Singhal.

Bhushan Power & Steel has a debt of over Rs 48,000 crore to a consortium of 31 lenders including SBI, Punjab National Bank, and others.

SBI had also recently moved to invoke Anil Ambani’s personal guarantee for Reliance Communications’ default. That matter is also pending in the top court.

Banks were recently urged by the Finance Ministry to take to collate data on personal guarantors to corporate debtors for cases pending before the NCLT and take consequential action to recover their dues.

First Published:Sept 7, 2020 8:22 PM IST