The Indian Supreme Court has made a significant reversal in a high-profile insolvency case involving Bhushan Power & Steel Ltd (BPSL) and JSW Steel. Initially, on May 2, 2025, the Court ordered the liquidation of BPSL and scrapped JSW Steel’s Rs. 19,350-crore resolution plan, which had been approved by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) in 2018 and 2019, respectively. However, after a review petition, the Court has now recalled its earlier verdict and reserved its judgment, indicating a willingness to reconsider its decision.
The case revolves around several key contentions, including who owns the EBITDA (Earnings before Interest, Tax, Depreciation, and Amortisation) generated during the Corporate Insolvency Resolution Process (CIRP) and implementation of the resolution plan. JSW Steel argues that the EBITDA is an operational attribute of the corporate debtor and not a distributable profit owed to lenders. On the other hand, the former promoters of BPSL contend that JSW Steel failed to fulfill its working capital commitment and instead routed funds via compulsorily convertible debentures (CCDs) of a subsidiary, which they term as “illegality” and “fraud”.
The Court has also heard arguments on the authority of the CoC after plan approval, with the Solicitor General arguing that the CoC’s authority persists until proceedings conclude. Additionally, the Court has criticized the actions of the Enforcement Directorate (ED), which had attached assets of BPSL, causing delays in the implementation of the resolution plan.
The case has significant implications for India’s insolvency resolution framework, particularly in relation to the permanence of resolution approvals, the legitimacy of review petitions, and the boundaries of CoC oversight. The Supreme Court’s decision could clarify these issues and potentially recalibrate expectations across India’s insolvency ecosystem, impacting how future resolution plans are structured, reviewed, and defended.
The key legal hinge points in the case include the tension between finality and correctness, the ownership of value accretion during resolution, and the friction between state action and IBC timelines. The Court’s decision is eagerly awaited, and its outcome will determine not only the fate of JSW Steel’s resolution plan but also have far-reaching implications for India’s insolvency landscape.