Dubious promoters should not be allowed to submit rehab plan: JSW Chairman

After seeking ban on trading in shares of listed firms referred to NCLT, JSW Steel Chairman Sajjan Jindal today said dubious promoters should not be allowed to submit rehabilitation plan under the insolvency law.

The JSW chief's comment comes a day after the Insolvency and Bankruptcy Board of India (IBBI) announced putting in place strict norms for resolution plan approval under the insolvency law, wherein an applicant's antecedents and credit worthiness will be checked.

"Dubious promoters should not be allowed to submit the rehabilitation plan to prevent misuse of the IBC," Jindal said in a tweet.

"Also the bidding criteria should be spelt out explicitly prior to inviting the bids. This will avoid likely litigation ..." the JSW Steel chief said.

The IBBI announcement of amendments related to the corporate persons resolution process has been made amid rising number of cases being filed under the insolvency law and concerns in certain quarters on whether the promoter of a company under the insolvency process can submit a resolution plan.

"Now prior to approval of a resolution plan, the resolution applicants, including promoters, will be put to a stringent test with respect to their credit worthiness and credibility," the IBBI said in an official release yesterday.

It is now clear that even promoters can submit resolution plan provided they are subject to strict disclosure requirements under the revised norms.

Last week, Jindal had said that trading in shares of the listed companies referred to the National Company Law Tribunal (NCLT) should be suspended to avoid market speculations.

"Listed company shares in the event of reference to #NCLT should be suspended as per global practice to avoid speculation in the market," Jindal had tweeted.

Jindal further tweeted that "suspension of shares helps in cleaner takeovers and doesn't make the deal expensive for the prospective investor @FinMinIndia #NCLT".

Investor must have flexibility for automatic de-listing of the company as the equity value is not there in most of NCLT cases, he said. His comments came at a time when insolvency proceedings are going on against Bhushan Steel, Essar Steel and Electrosteel Steels after main lender SBI referred them to the National Company Law Tribunal (NCLT) for recovery under the Insolvency and Bankruptcy Code (IBC).

While Bhushan Steel is in default of Rs 44,478 crore to banks, Essar Steel owes Rs 37,284 crore and Electrosteel Steels Rs 10,273.6 crore.

Earlier media reports had suggested that JSW Steel was keen on buying Bhushan Steel, Monnet Ispat and even Essar Steel.