The deal goes back 5 years when JSW Steel had come in the last minute and worked out a rescue plan for Bhushan Power & Steel Ltd (BPSL). Bhushan was under debt of nearly ₹47,000 crore to its financial and operational creditors. As against that, the eventual resolution was fixed by JSW Steel at ₹19,500 crore, that is not bad considering it is the range of 40% to 45% of the dues. However, a full 5 years later, after almost ₹17,000 crore has already been paid to the banks, the Supreme Court has rejected the deal, and called for BPSL to be liquidated. 

JSW Steel and Committee of Creditors (COC) have filed with the Supreme Court for a review petition. The stakes are very high at this juncture. JSW Steel already invested a lot of time, money, and its management bandwidth in this deal. The idea of going back on the deal does not arise for JSW. The COC would stand to lose the most. If the resolution plan does not go through, then the banks have to refund the monies and the money that they will eventually get from liquidation will be much lower. Neither COC, nor JSW Steel can afford annulling the deal. 

One perspective, and rightly so, is that sagacity should have ideally prevailed in this case. Too much money, time as well as management bandwidth had already been invested in the resolution, so any going back would be too expensive. The other valid argument that is being given is that if the Supreme Court really wanted to annul the deal, it should have been done 5 years ago, when the stakes were not so high. Even legal experts are of the view that forcing Bhushan Power and Steel to now go for liquidation would only lead to avoidable losses to the acquirer and also to the lending banks. The core idea of the insolvency resolution itself is to find a reasonable resolution that can help realize the maximum value. This SC ruling goes against the grain of IBC. 

There is another section of legal eagles who believe that the Supreme Court has done the right thing. Adherence to the rulebook is non-negotiable. Clearly, the banks and JSW Steel were aware that what they were doing was against the rule book, and hence they cannot blame the Supreme Court for this decision. They also point to the fact that if expediency and commercial sense were the sole considerations, the rule of law would not be required. More importantly, this could serve as precedent for the future. This may look like a steep price to pay, but there is a strong legal argument too!