NCLT admits insolvency plea against Jaiprakash Associates

4 Jun 2024 , 01:05 PM

Corporate insolvency of Jaiprakash Associates Ltd. (JAL) has been accepted by NCLT.

According to news reports, the tribunal appointed Bhuvan Madan as the business’s interim resolution professional (IRP) in addition to admitting the company under the Corporate Insolvency Resolution Process (CIRP).

The company’s failure to settle its debt of over ₹3,000 Crore prompted the private sector lender to file an application with the tribunal.

In an oral order on Monday, the company was allowed by the division bench consisting of judicial member Praveen Gupta and technical member Ashish Verma. The complete sequence was not accessible until the story was filed.

The move is anticipated to hinder the company’s attempts to carry out an agreement with Dalmia Bharat Group, which was to buy the cement, clinker, and power divisions of Jaiprakash Associates for an enterprise value of ₹5,666 Crore.

Senior attorney RP Agarwal is representing Jaiprakash Associates in the matter, while senior counsel Amit Saxena and Madhav Kanoria of the legal firm Cyril Amarchand Mangaldas (CAM) are representing the lender in the Allahabad bench of the National Company Law Tribunal.

The Reserve Bank of India (RBI) has been requested to approve the sale of the company’s debt of ₹18,000 Crore to the National Asset Reconstruction Company of India (NARCL), as reported by ET last month. The company’s lenders, led by the State Bank of India (SBI), have made this request.

Lenders are requesting approval since the RBI instructed banks to send 28 firms, including JAL, for debt resolution under the Act in 2017, shortly after the Insolvency and Bankruptcy Code (IBC) was passed. The business was included in the RBI’s second list of 28 accounts that needed to be resolved under the IBC.

The flagship company of the Manoj Gaur-led Jaypee Group, JAL consists of operations in the areas of cement, real estate, hotel, fertiliser, and construction. After an uncontested Swiss challenge auction, NARCL purchased 62%, or ₹9,234 Crore, of Jaypee Infratech’s debt in fiscal 2023, providing lenders with a 39% recovery.

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