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Lenders decided to toss out the plea of Bhushan Power & Steel promoter family - the Singals, and Liberty House to re-consider their bids for the company, and decided to go ahead with handing over the firm to Tata Steel which won the bid in bankruptcy court, said two people familiar with the development.
The two appealed to lenders that they were eligible to bid for the company following a tribunal order in another case which held that the amended Insolvency and Bankruptcy Code prohibits promoters is applicable only to cases that were filed after the amendment and not before. In effect, the law is prospective and not retrospective.
Since the resolution for Bhushan Power was finalised before the government amended the Insolvency and Bankruptcy Code, the promoters demanded their bid be considered. Lenders will submit in sealed envelope the highest bidder to the tribunal and voting will be done following a ruling from the tribunal, said those people who did not want to be identified.
Liberty House in the meanwhile moved the higher bench of bankruptcy court demanding information on bidding process. The tribunal will hear the matter on July 12.
Tata’s won the bid for the company at Rs 17,500 crore even though it was lower than the Rs. 18,500 crores from Liberty since the financial backing provided by the Tatas gave comfort to lenders. JSW Steel made a bid of Rs 13,000 crore.
Singal’s had pleaded that the lenders should give them an opportunity to submit a plan following an order passed by M K Shrawat that the law banning defaulting promoters to bid for their own company not be applicable in cases filed before November 23- when the amendments were made in the IBC.
In an insolvency case of Wig Associates, the tribunal ruled that “...any amendment to a statute affecting the legal rights of an individual must be presumed to be prospective unless it is made expressly or is impliedly retrospective.”
Banks led by Punjab National Bank had referred the company to bankruptcy court after they failed to repay dues of around Rs 49,200 crore.
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