Both the petitions have been filed under the Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, where the financial creditor initiates insolvency proceedings with a claim.

Bhushan Steel has a liability of Rs 43,000 crore towards more than 20 banks, including PNB and SBI. While the chunk of term lending is by SBI, the working capital loan has been extended by PNB. Bhushan Power has a liability of Rs 37,000 crore towards a number banks.

Bhushan Steel and Power are two of the 12 companies whose names were recommended by the Reserve Bank of India (RBI) for initiation of corporate restructuring through the insolvency route. The company tried to restructure itself through the sustainable structuring of stressed assets, or S4A, route earlier this year. According to RBI’s S4A scheme, banks are required to establish through a forensic audit that there was no malfeasance on the part of the promoter. If the audit finds anything adverse, S4A cannot be implemented unless there is a change in ownership or management is not vested with the delinquent promoters.

With 5.6 million tonnes of secondary steel capacity, the company is the third-largest secondary steel producer in the country. Buoyed by exports in 2016-17, the company saw better sales. Its gross sales were Rs 4,000 crore for the quarter ended December 31, 2016, against Rs 2,747.68 during the same period in 2015-16.