Tata Steel has shot off a letter to lenders of Bhushan Power & Steel saying that a rebid was in contravention of the National Company Law Appellate Tribunal (NCLAT) order and the Insolvency and Bankruptcy Code (IBC), sources close to the development said.On Friday, the committee of creditors (CoC) decided to give bidders time to improve their bids after JSW Steel revised its offer to Rs 180 billion, up from Rs 110 billion, in a surprise move. Tata Steel’s letter has gone out to 11-12 lenders in the consortium.
It now remains to be seen whether lenders decide to go ahead with rebids because the next course of action in Bhushan Power may depend on it.
Lenders had given time till 9 am to revise bids and a CoC meeting to finalise was scheduled for 10 am the same day.
By the end of June, a formal communication was made to Tata Steel, declaring it the highest qualified bidder and Tata Steel was called for negotiations. Hence, a rebid would be in violation of the IBC, sources close to the development said.
Lenders had decided to vote on Tata Steel’s resolution plan after declaring it the highest qualified bidder but fresh submissions made by Liberty House before the NCLAT, stayed the voting.
Vacating its earlier stay, the appellate tribunal then directed the CoC to consider the resolution plans submitted by the three firms — Tata Steel, JSW Steel, and Liberty House. The NCLAT also directed the CoC to call all the bidders along with operational creditors and suspended board of directors to the meeting.
On the eve of the Friday meeting, JSW Steel revised its offer. It is understood that Tata Steel had said that it would be unfair to go for a rebid during the course of the meeting on Friday, sources said.
The Tata Steel letter also pointed out to lenders that the decision on the resolution plans was to be made based on the existing bids, said sources. To that extent, a rebid was a violation of the NCLAT order.
The bids submitted in February were like this: Tata Steel – Rs 170 billion, JSW Steel – Rs 110 billion and Liberty House – Rs 186 billion, in terms of upfront payment to lenders.
Sources said that before the NCLAT’s summer break, the CoC had appealed for a rebid, but it was not allowed.
Tata Steel has also mentioned that it was the intent of the legislature not to entertain late bids as manifest in the latest amendments to the IBC, sources indicated.
Source: Business Standards, July 30, 2018