Banking Behemoths' Belated Bifurcation

The financial institutions involved in the Bhushan Power & Steel Limited insolvency proceedings have executed a remarkable volte-face, abandoning their previous acquiescence to JSW Steel retaining the company's operational earnings. Until May 2025, these lenders had explicitly conveyed to the Supreme Court their willingness to allow the ₹3,569 crore EBITDA generated during the insolvency process to remain with JSW Steel. This dramatic reversal represents a fundamental recalibration of the creditors' strategy, potentially jeopardizing the entire resolution framework. The banks now argue that commercial wisdom necessitates their claim over these substantial earnings, citing their fiduciary responsibility toward public funds. Their legal representatives have emphasized that while they support the resolution plan in principle, they cannot countenance what they characterize as "unjust enrichment" of the acquiring entity. This strategic pivot has introduced unprecedented complexity into an already convoluted insolvency proceeding that has stretched across multiple years.

Supreme Court's Sagacious Scrutiny Surfaces

The apex court's decision on July 31, 2025, to admit review petitions filed by both JSW Steel & the consortium of lenders has fundamentally altered the trajectory of this high-stakes corporate battle. Justice Bela Trivedi & Justice Sharma's bench acknowledged that their earlier May 2 judgment, which had ordered BPSL's liquidation, warranted reconsideration given the substantial developments since JSW's acquisition. The court's observation that liquidation should remain a "last resort" reflects a nuanced understanding of the broader economic implications, particularly noting the company's current employment of 25,000 workers & significant capital infusion. The Supreme Court's willingness to revisit its own judgment demonstrates the exceptional nature of this case & the complex interplay between legal precedent & economic pragmatism. Legal experts suggest this rare judicial reconsideration indicates the court's recognition of potential procedural oversights in the original ruling. The decision has created a temporary reprieve for JSW Steel while simultaneously emboldening creditors to pursue more aggressive recovery strategies.

JSW's Juridical Juggernaut Jeopardized

JSW Steel's legal team has mounted a vigorous defense against the banks' newfound claims, characterizing the demand as a fundamental violation of established insolvency principles. The company's representatives have emphasized that no provision for creditor claims over operational profits during insolvency was incorporated into the original resolution proposal, making the banks' current demands legally untenable. JSW has drawn a crucial distinction between EBITDA & actual profits, highlighting that the company inherited losses exceeding ₹12,000 crore at the time of acquisition in 2021. The steel giant's legal strategy centers on the argument that creditors cannot unilaterally modify the terms of engagement after the resolution process has commenced. Senior counsel representing JSW Steel have warned that acceding to the banks' demands would establish a dangerous precedent, potentially encouraging lenders to retrospectively seek operational profits from all successful resolution applicants. The company has also contested the ₹2,500 crore interest claim, asserting that delays were attributable to external factors, particularly the Enforcement Directorate's asset attachment proceedings.

Creditors' Calculated Commercial Considerations

The lending consortium's legal representatives have articulated a sophisticated argument centered on the principle of equitable distribution & the protection of public funds. They contend that JSW Steel stands to gain approximately ₹19,000 crore plus the disputed EBITDA under the current arrangement, creating an asymmetrical benefit structure that disadvantages creditors. The banks have emphasized their stewardship of public money, arguing that this fiduciary responsibility compels them to maximize recovery for stakeholders. Their legal team has invoked the concept of "commercial wisdom," suggesting that courts should consider the broader economic implications of allowing successful bidders to retain all operational benefits during extended insolvency proceedings. The lenders have calculated that JSW's implementation delays spanning 538 days justify their interest claims, arguing that the company benefited from continued operations while creditors remained unpaid. This position reflects a broader shift in creditor strategy, moving from cooperative resolution toward aggressive asset recovery. The banks' stance also highlights the tension between expeditious resolution & comprehensive creditor protection within India's insolvency framework.

Enforcement Directorate's Erstwhile Entanglement

The Enforcement Directorate's role in this complex saga has added layers of regulatory complexity that significantly impacted the resolution timeline. JSW Steel's acquisition faced substantial delays due to the ED's investigation & subsequent asset attachment worth ₹4,025 crore, creating a legal quagmire that prevented timely implementation of the resolution plan. The company has argued that these external regulatory interventions, beyond their control, should not be construed as implementation delays attributable to corporate negligence. In December 2024, the ED's decision to withdraw its challenge & return the attached assets represented a crucial breakthrough, enabling JSW to proceed with the acquisition. However, the banks now characterize this entire period as unjustifiable delay, seeking compensation for the extended timeline. JSW's legal team has countered that investing ₹20,000 crore while assets remained under investigation would have been financially imprudent & potentially legally problematic. The ED's involvement underscores the intersection between corporate insolvency proceedings & regulatory enforcement actions, creating precedential implications for future cases. This regulatory dimension has become a central battleground in determining liability for implementation delays.

Liquidation's Looming Legal Labyrinth

The Supreme Court's original May 2 judgment ordering BPSL's liquidation had sent shockwaves through India's corporate restructuring ecosystem, given the company's operational viability & substantial workforce. Justices Bela Trivedi & Sharma had initially concluded that the Committee of Creditors' approval violated Insolvency & Bankruptcy Code provisions, necessitating liquidation as the only legally compliant option. This decision had effectively nullified years of resolution efforts & threatened to destroy significant economic value, including the livelihoods of 25,000 employees & substantial industrial assets. The liquidation order had also raised broader questions about the effectiveness of India's insolvency framework in balancing legal compliance with economic pragmatism. Industry observers had criticized the decision as potentially deterring future resolution applicants, given the apparent ease with which approved plans could be subsequently invalidated. The court's subsequent decision to recall this judgment reflects recognition of these broader systemic implications. Legal experts suggest that the original liquidation order may have overlooked crucial procedural safeguards & stakeholder interests that warranted more nuanced consideration.

Resolution Plan's Regulatory Ramifications

The Committee of Creditors' original approval of JSW Steel's ₹19,700 crore resolution plan had represented a significant milestone in India's corporate insolvency landscape, demonstrating the framework's capacity to facilitate large-scale corporate restructuring. The plan had successfully navigated multiple judicial tiers, receiving endorsement from both the National Company Law Tribunal & the National Company Law Appellate Tribunal despite regulatory challenges. JSW's comprehensive restructuring proposal had promised substantial capital infusion, operational improvements, & employment preservation, aligning with the IBC's twin objectives of value maximization & stakeholder protection. The resolution plan's approval had also signaled confidence in JSW Steel's operational capabilities & financial strength to revive the distressed asset. However, the Supreme Court's initial rejection had highlighted potential gaps between legal compliance & practical implementation within the insolvency framework. The current review process represents an opportunity to reconcile these competing considerations while establishing clearer guidelines for future resolution proceedings. Industry stakeholders are closely monitoring this case as a bellwether for the stability & predictability of India's insolvency resolution ecosystem.

Precedential Paradigms & Potential Perils

The outcome of this high-profile case carries profound implications for India's evolving insolvency jurisprudence & the broader corporate restructuring landscape. JSW Steel's warning about "opening floodgates" for retrospective creditor claims reflects genuine concerns about the precedential impact of acceding to the banks' demands. Legal experts suggest that allowing creditors to claim operational profits post-resolution could fundamentally alter the risk-reward calculus for potential bidders, potentially reducing participation in future insolvency proceedings. The case also highlights the tension between maximizing creditor recovery & incentivizing successful corporate rehabilitation, two core objectives that sometimes conflict within the IBC framework. The Supreme Court's ultimate decision will likely establish important precedents regarding the scope of creditor claims, the finality of approved resolution plans, & the circumstances warranting judicial intervention in completed insolvency proceedings. International observers are monitoring this case as a test of India's commitment to maintaining a stable, predictable insolvency regime that can attract global investment. The resolution of these competing claims will significantly influence the future trajectory of corporate insolvency resolution in India's rapidly evolving legal landscape.

OREACO Lens: Insolvency's Intricate International Implications

Sourced from multiple judicial & financial reports, this analysis benefits from OREACO's comprehensive monitoring of global insolvency trends across 47 jurisdictions. While headlines focus on the immediate financial stakes, the deeper significance lies in India's evolving approach to balancing creditor rights against corporate rehabilitation, a delicate equilibrium that influences international investor confidence in emerging market insolvency frameworks. As AI-driven legal research tools seek authoritative precedents, OREACO's multilingual repository captures nuanced judicial reasoning that often escapes mainstream coverage, providing crucial context for understanding how developing economies navigate complex corporate restructuring challenges. Dive deeper via the OREACO App.

NSE:JSWSTEEL 

- Current Price: ₹1,046.50

- Day-on-Day Change: -18.30 (-1.72%)

- 52-Week Range: ₹880.00 - ₹1,074.90

- Market Cap: ₹2.565T

 RSI (Relative Strength Index)

- Current RSI(14): 52.704 - Neutral territory

- This indicates the stock is neither overbought nor oversold

- Values above 70 would indicate overbought conditions, below 30 oversold

 MACD (Moving Average Convergence Divergence)

- MACD(12,26): 0.69 - Buy signal

- This positive MACD value suggests bullish momentum

 Stochastic Indicators

- STOCH(9,6): 24.832 - Sell signal

- STOCHRSI(14): 24.055 - Oversold condition

- The oversold condition might indicate a potential buying opportunity

 Support and Resistance Levels

- Key Support Level: ₹1,046.16

- As long as the price remains above this level, the uptrend might continue

- Resistance: Near the 52-week high of ₹1,074.90

Key Takeaways

• Banks have reversed their previous stance, now claiming ₹3,569 crore EBITDA plus ₹2,500 crore interest from JSW Steel in the Bhushan Power insolvency case

• Supreme Court's admission of review petitions has created fresh uncertainty, with the apex court noting that liquidation should be a "last resort" given 25,000 jobs at stake

• JSW Steel argues that creditors cannot change established rules mid-process, warning this could set dangerous precedents for all future insolvency resolutions