Debt-ridden company Jaiprakash Associates Limited has suffered a major setback. Actually, the National Company Law Tribunal (NCLT) has accepted the bankruptcy petition filed by ICICI Bank and State Bank of India (SBI) against Jaiprakash Associates Limited (JAL). Let us tell you that ICICI Bank had started bankruptcy proceedings in the year 2018, while SBI joined the process in the year 2022. A consortium of 22 lenders led by ICICI Bank, SBI and IDBI Bank have investments in Jaiprakash Associates Limited. Shares of Jaiprakash Associates Ltd closed at ₹14.79, down ₹0.68 or 4.40% on the BSE.
Jaypee Infrastructure merger rejected
The two-member Allahabad bench of NCLAT on Monday afternoon passed the order to initiate the insolvency process. This bench included Praveen Gupta and Ashish Verma. Lawyers associated with the case said that the bench has directed to appoint an interim resolution professional (IRP) as well as initiate corporate insolvency resolution process (CIRP) against JAL. Along with this, the tribunal also rejected the merger of Jaiprakash Associates Limited with Jaypee Infrastructure Development Limited.
What is the matter?
In September 2018, private sector ICICI Bank had filed an application to initiate insolvency proceedings against JAL under Section 7 of the Insolvency and Bankruptcy Code (IBC). Apart from this, the country’s largest lender SBI had also approached NCLT against JAL, claiming total payment default of Rs 6,893.15 crore till September 15, 2022.
JAL was also included in the Reserve Bank’s list of 26 major defaulters for initiating insolvency proceedings in August 2017. Several group companies, including Jaypee Cement Corporation, are currently facing insolvency proceedings before the NCLT. Jaypee Infratech, a group company that is also going through insolvency proceedings, was upheld by the Mumbai-based security group’s bid for which appellate tribunal NCLAT last week. Jaiprakash Associates had last month said it had defaulted on paying the principal loan amount of Rs 1,751 crore and interest of Rs 2,865 crore as on April 30. According to JAL, its total debt (including interest) is Rs 29,805 crore, which is to be repaid by 2037. Of this, payment of only Rs 4,616 crore is outstanding till April 2024.
JAL had said that Rs 18,955 crore of its total borrowings would be transferred to the proposed special vehicle (SPV). The plan for this, duly approved by all stakeholders, is pending the approval of NCLT.
