JSW Steel is reportedly moving the Supreme Court to seek a stay on the liquidation of Bhushan Power and Steel Ltd (BPSL). This development follows the Supreme Court's May 2, 2025, order that rejected JSW Steel's resolution plan for BPSL, leading to a directive for the company's liquidation.

JSW Steel's initial acquisition of BPSL occurred in March 2021 through the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). At the time, JSW Group Chairman and Managing Director Sajjan Jindal highlighted that the acquisition facilitated the group's entry into Odisha and eastern India. However, the Supreme Court has now deemed JSW Steel's resolution plan non-compliant with the IBC's requirements.

The Supreme Court emphasized that the resolution plan approved by the Committee of Creditors (CoC) did not adhere to the stipulations outlined in sub-section (2) of Section 30 of the IBC, thus violating the code's expressed provisions and the CIRP Regulations. Section 30 (2) pertains to the Resolution Professional's responsibility to assess the resolution plans. The court also noted that the plan was in violation of Section 31(2) of the IBC, which empowers the NCLT to reject a resolution plan if it does not align with IBC requirements.

In light of this, JSW Steel has issued notices to banks, seeking a refund of approximately Rs 19,300 crore paid towards the resolution plan. Additionally, the company is reportedly requesting a 60-day delay in BPSL's liquidation as it explores further legal options. It's believed that JSW Steel may file a review petition against the Supreme Court's decision.

According to reports, the CoC had previously assured the Supreme Court that the funds would be returned within two months if JSW's resolution plan was rejected. The Supreme Court has directed the NCLT to handle BPSL's liquidation, while the creditors retain the authority to appoint and supervise the liquidator. At the time of insolvency, BPSL held debts exceeding Rs 45,000 crore, making JSW Steel's Rs 19,300 crore plan the highest bid for rescuing the company.

The implications of the Supreme Court's decision extend beyond the immediate financial impact on JSW Steel. The order mandates the return of payments made by JSW Steel to creditors and equity contributions within two months. The Supreme Court also observed that the resolution professional of BPSL did not adequately fulfill his duties under the IBC, and the CoC failed to exercise its commercial wisdom by approving a resolution plan that contravened the IBC.

Furthermore, JSW Steel potentially faces a reversal of tax benefits that were availed following the acquisition of BPSL. Under IBC norms, companies can offset losses of the insolvent firm against profits. BPSL had approximately Rs 7,000 crore in losses, which it offset after the acquisition.

Despite the challenges, Fitch Ratings suggests that JSW Steel's EBITDA net leverage may improve if the Rs 19,300 crore refund is implemented, potentially offsetting the loss of BPSL's EBITDA contribution. Even without BPSL, JSW's crude steel capacity remains the highest in India.