Discuss about the acquisition of Bhushan Steel Ltd. by Tata Steel Ltd.

The acquisition of Bhushan Steel Ltd (BSL) for ₹ 35,200 crore by Bamnipal Steel Ltd (BNL), a subsidiary of Tata Steel Ltd. in May 2018, has been the first major case of acquisition of a major stressed asset under the Insolvency and Bankruptcy Code. BNL completed the acquisition of controlling stake of 72.65 per cent in BSL in accordance with the approved resolution plan under the Corporate Insolvency Resolution Process (CIRP) of the IBC. Tata Steel has paid ₹ 35,200 crore in cash to acquire Bhushan Steel. It would pay another ₹ 1,200 crore over next 12 months to operational creditors. The promoters of BSL approached the National Company Law Appellate Tribunal (NCLAT) over issue of ineligibility of Tata Steel to acquire BSL. L&T, an operational creditor also approached the Hon'ble NCLAT over issue of unfair distribution of settlement amount for its claim under the provisions of IBC, 2016. NCLAT upheld the acquisition of Bhushan Steel, rejecting allegations of its ineligibility by the promoters of the company. The NCLAT also rejected the claims of L&T, an operational creditor of Bhushan Steel Ltd, opposing Tata Steel's resolution plan seeking a higher priority in debt settlement. The NCLAT said that Tata Steel UK, a foreign subsidiary of Tata Steel, which was fined by an English Court in February 2018 under UK act, had a provision of 'imprisonment for a term not exceeding twelve months, or a fine, or both'. While, the provision in section 29A(d) of the Code, which deals with eligibility, stipulates "has been convicted for any offence punishable with imprisonment for two years or more", cannot be equated with Section 33(1)(a) of the U.K Act, said NCLAT. Section 29A of the IBC mandates that a person convicted for any offence punishable with imprisonment for two years or more is ineligible for submitting a resolution plan. Over the claims of L&T, which had supplied goods and machineries over ₹ 900 crore, NCLAT said that Tata Steel's resolution plan was fair towards operational creditors of Bhushan Steel which has a total demand of ₹ 1,422 crore. The NCLAT observed that the company has allotted ₹ 1,200 crore for them and L&T plea for a higher priority could not be accepted. Moreover, it also declined the plea of the promoter's family, contending Tata Steel's Resolution Plan' was illegal as it purports to transfer shares of the 'preference shareholders' of Bhushan Steel without their consent for a fixed consideration of ₹ 100 as against ₹ 2,269 crore.