NCLAT upholds bankruptcy order against Jaiprakash Associates

In a major blow to Jaiprakash Associates Ltd (JAL), the debt-laden parent company of embattled Jaypee Group, the National Company Law Appellate Tribunal (NCLAT) on Friday dismissed its appeal challenging the company’s admission of insolvency.

The ruling confirmed the June 3 order of the National Company Law Tribunal (NCLT), which allowed JAL to enter insolvency proceedings on the request of ICICI Bank.

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The NCLAT bench, comprising Chairman Justice Ashok Bhushan and Technical Members Barun Mitra and Arun Baroka, upheld the NCLT’s decision and said, “After answering all the questions, we see no reason to interfere with the NCLT order.” dated June 3 . “

Bankruptcy proceedings stem from $JAL defaulted on a loan disbursed by ICICI Bank of Rs 1,269 crore. Between 2011 and 2015, ICICI Bank sanctioned loans amounting to $A total of Rs 4,750 crore was paid for the six facilities, but JAL failed to repay it.

JAL blamed its financial woes on delays in government approvals, protracted land acquisition litigation for the Yamuna Expressway project and policy changes. However, these arguments failed to convince the NCLT, which initiated Corporate Insolvency Resolution Process (CIRP) and rejected JAL’s settlement proposal. The proposal includes an advance payment $200 Crores and Repayment Commitment $16,000 crore in 18 weeks.

JAL’s financial woes are shocking. As of November 10, the company’s temporary outstanding borrowings were $55,525.89 crore. The admitted claim is $571.9 billion, becoming one of the largest unresolved bankruptcy cases in India, second only to Videocon Industries $650 billion debt.

State Bank of India (SBI) is JAL’s largest creditor. Its claims include: $15,500 crore, followed by ICICI Bank $10,500 crore, has been appointed as the lead lender.

solve work

JAL has made several attempts to avoid bankruptcy. Last week, the company proposed a $Rs 16,000-crore resolution package, including upfront payments $4,000 crore, which will be disbursed within nine months after lender approval. However, the plan failed to gain traction.

In early June, lenders rejected a revised one-time settlement proposal that would have included a higher upfront payment and the sale of JAL Cement assets to address the debt load. Likewise, a $The Rs 10,000-crore bid floated by National Asset Reconstruction Company Limited (NARCL) in March-April was deemed unsatisfactory by lenders.

JAL has sold several cement plants over the years to reduce its mounting debt, but these measures have proven insufficient.

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During the insolvency proceedings, interim resolution professionals assured NCLAT that JAL’s 25,000 employees and ongoing projects would not be affected and that the company would continue to operate as a going concern. Despite these assurances, JAL’s suspended director Sunil Kumar Sharma sought a stay on the insolvency proceedings, arguing that it could jeopardize critical infrastructure projects in India and abroad.