Ex-promoters can’t hold stake in insolvent firm: Supreme Court
The Supreme Court has said the promoter of an insolvent firm cannot continue holding residual stakes in the company after it has been acquired by another entity under the Insolvency and Bankruptcy Code (IBC). SC dismissed the appeal by Bhushan Steel’s promoters Neeraj Singal and others. The apex court said it agrees with the orders of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) in this case and sees no merit to pass a different order.
The promoters were holding 2.35 per cent shares in the company even after Tata Steel acquired 72.65 per cent shares during the resolution process under the IBC. Bhushan Steel owed Rs. 59,000 crore to the creditors and was dragged to the NCLT by SBI in 2017. The NCLT approved Tata Steel’s Rs. 35,000-crore resolution plan for the company in May 2018.
