The Allahabad bench of the National Company Law Tribunal (NCLT) on Monday directed initiation of insolvency proceedings against debt-ridden Jaiprakash Associates (JAL). The insolvency plea against the company was filed by ICICI Bank and State Bank of India in 2018 and 2022 respectively.
Pronouncing the order, a two-member NCLT bench, comprising members Praveen Gupta and Ashish Verma also appointed an interim resolution professional (IRP).
Jaiprakash Associates, which is the flagship firm of Jaypee Group, is mainly into construction, cement and hospitality businesses. JAL has sold many cement plants in the last few years to reduce its debt.
The ICICI Bank has claimed over Rs 3,000 crore to be recovered, including interest, in its plea. The first insolvency plea was filed by ICICI Bank before the tribunal in 2018. Following this, SBI also filed a plea in 2022 claiming a total default of Rs 6,893.15 crore.
JAL was part of the Reserve Bank of India’s list of 26 big loan defaulters to commercial banks for initiating bankruptcy proceedings in August 2017.
Several Jaypee Group companies namely Jaypee Cement Corporation are facing insolvency proceedings before NCLT. Its other firm Jaypee Infratech is also in the middle of insolvency proceedings, in which last week the National Company Law Appellate Tribunal (NCLAT) upheld the bid of Mumbai-based Suraksha group.
Last month, JAL had informed that the company had on April 30, defaulted on repayments of a principal amount of Rs 1,751 crore and interest of Rs 2,865 crore.
“Total borrowing (including interest) of the company is Rs 29,805 crore, repayable by 2037, against which only Rs 4,616 crore is overdue as of April 30, 2024,” JAL had said.
The loans pertained to various banks, and the nature of the obligation is fund-based working capital, non-fund-based working capital, term loans and foreign currency convertible bonds.
Out of the total borrowing of Rs 29,805 crore, JAL had said that Rs 18,955 crore would be transferred to the proposed special purpose vehicle.
For this, a scheme of arrangement duly approved by all the stakeholders is pending for sanction of the NCLT. The entire loan in any case is under restructuring, the company said.
“As a responsible borrower, the company has been taking tangible steps to reduce the borrowings. After the proposed divestment of the cement business and the restructuring are taken into consideration, the borrowing will get almost to nil,” JAL had said last month.