NCLT Mumbai Dispenses With JSW Steel Unsecured Creditors' Meeting In Piombino Steel Merger
The National Company Law Tribunal (NCLT), Mumbai, has recently dispensed with the meeting of unsecured creditors of JSW Steel Limited in its proposed amalgamation with its subsidiary, Piombino Steel Limited.
It, however, directed the company to issue notices to unsecured creditors with outstanding balances exceeding ₹50 lakh, informing them that they may file objections before the Tribunal within 30 days.
The order was passed by Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar on a first-motion application under Sections 230 to 232 read with Section 234 of the Companies Act, 2013.
The application relates to the proposed amalgamation of Piombino Steel with its holding company, JSW Steel. The applicants said the merger would enable JSW Steel to directly hold its investment in Bhushan Power and Steel Limited, provide additional cash to pursue growth, reduce regulatory compliance and overhead costs, simplify financial consolidation and eliminate duplicative administrative functions.
Under the Scheme, shareholders of Piombino Steel, excluding JSW Steel and its nominees, would receive 10 equity shares of Re.1 each of JSW Steel for every 156 equity shares held by them.
The tribunal noted that all equity shareholders and unsecured creditors of Piombino Steel had furnished consent affidavits. It also recorded that 92% of JSW Steel's secured creditors had done the same.
Taking note of the applicants' submissions that the scheme would not affect creditors and that JSW Steel's post-merger net worth would remain highly positive, the tribunal relied on NCLAT rulings in DLF Phase-IV Commercial Developers Ltd., Ambuja Cements Ltd. and Patel Engineering Ltd. to dispense with the meeting of unsecured creditors.
For the First Applicant Companies: Senior Advocate Gaurav Joshi along with Advocates Anindya B., Metul Shah, Rushabh Gala, K. Shethy, Vashisht