In a move that sent shockwaves through India’s corporate corridors, the Supreme Court has upended a landmark insolvency resolution, tearing up JSW Steel’s Rs193.5 billion acquisition of Bhushan Power and Steel—over four years after the deal had already been closed, the plant humming, and fresh capital infused.
Instead of affirming the transaction, the court has ordered Bhushan’s liquidation, citing a fundamental breach in the resolution plan. The fine print? JSW Steel injected only Rs1 billion in equity and substituted the rest with Rs84.5 billion in convertible bonds—an accounting workaround the court wasn’t buying. Add to that delays of over 500 days in making creditor payments, and the apex bench was done giving leeway.
The ruling has flung open the gates of uncertainty across India’s distressed asset market. What was once seen as a maturing insolvency framework, with some occasional stumbles, now stands at a crossroads. Deals once thought to be etched in stone are suddenly up for judicial revision.
“This judgment doesn’t just apply to insolvency—it casts a shadow over all commercial certainty,” said one senior restructuring advisor. “What’s to stop any future deal from being undone years later?”
Since the launch of India’s Insolvency and Bankruptcy Code (IBC) in 2016, the goal has been speed and certainty—rescue viable businesses, recover dues quickly, and let lenders and investors move on. But this decision strips away that assurance, and more critically, signals that procedural sanctity will now trump commercial expediency.
“The court has chosen to send a message—miss your deadlines, and the consequences will be terminal,” said one observer. It’s a precedent that risks turning off both domestic and foreign investors already wary of India’s legal maze.
JSW, for its part, said it’s reviewing the order. But for now, it faces the real prospect of watching a functioning company—one it nurtured and scaled—get dismantled.
Bhushan is no longer a distressed relic. It’s been expanded from 2.75 to 4.5 million tonnes annual capacity and now accounts for nearly 10% of JSW’s consolidated earnings. Reversing that transformation would be a herculean and painful task.
Meanwhile, policymakers are scrambling. A government response is in the works, but legal and financial experts alike are calling for a rethink of the IBC itself. The key ask: once the top court has approved a transaction, it should carry irrevocable finality—unless gross fraud is proven.
The other impact is subtler but just as significant. Private credit funds may find new opportunity in this turmoil, stepping in with pre-NCLT solutions that dodge the legal uncertainties now surrounding formal insolvency proceedings. As one director at a global investment firm put it, “NCLT is no longer a solution—it’s the risk. And that fear is what’s creating opportunity for bespoke financing.”
With litigation looming and review petitions likely, the Bhushan-JSW saga is far from over. But one thing is certain: for India Inc., deal certainty has become a luxury. And every bidder in every distressed auction from here on out will read this ruling like a warning label.
