'Plan to shield IBC cos from PMLA against promoters'

'Plan to shield IBC cos from PMLA against promoters'
NEW DELHI: The government is looking to address concerns over the Enforcement Directorate’s decision to attach properties of Bhushan Power and Steel, raising questions over its resolution under the Insolvency and Bankruptcy Code (IBC), finance minister Nirmala Sitharaman has told TOI.

The minister indicated that a system may be worked out under which action related to the Prevention of Money Laundering Act (PMLA) against the promoter doesn’t impact a company’s resolution under the IBC. The ED’s action has resulted in main applicant JSW reviewing its offer as several assets of one of the most high-profile IBC cases will not be part of the transaction.

“I have had at least three meetings with the agencies, the RBI and among ourselves. We are trying to see how individual-related PMLA omissions and commissions should not affect the resolution-driven process under IBC,” Sitharaman told TOI in an interview.

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The minister said the government had been proactive in clearing roadblocks in the IBC process and added that it quickly anticipated the fallout of a ruling by the National Company Law Appellate Tribunal (NCLAT) in the Essar Steel case on the distribution of funds from a resolution and moved amendments within days. Just last week, the Supreme Court held that the decision of the committee of creditors was final and also settled the issue of fund distribution.

“When I had moved the amendments in the last session, some opposition leaders had said we were making several corrections to a law that was only two years old. I had justified it by saying that we are correcting it. Actually, any law should be robust and should keep evolving according to developments. IBC is keeping pace,” Sitharaman said.

Last month, the ED had provisionally attached assets of over Rs 4,000 crore of Bhushan Power and Steel’s plant in Odisha in an alleged money laundering case related to diversion of bank loans. The Singals, the erstwhile promoters of the company, are under the scanner of multiple law enforcement agencies, including the ED and the Serious Fraud Investigation Office.

The ED is of the view that insolvency proceedings are part of civil law and cannot override criminal action. This has forced NCLAT to put on hold JSW’s Rs 19,700-crore offer as part of the resolution exercise. Tackling the problem may require amendments to the PMLA.