ICICI Bank on Monday filed an insolvency case against Jaiprakash Associates before the Allahabad bench of the National Company Law Tribunal (NCLT), which issued notices to the latter seeking a reply by September 17 when the matter will be heard next. The company owes around Rs 1,260 crore to ICICI Bank. ICICI Bank had filed an insolvency case in the NCLT after Reserve Bank of India last month rejected its plea to make an exception in the case of JP Associates as banks had finalised a restructuring plan and also partly implemented it. Once an insolvency plea is admitted, a resolution professional is appointed to complete the resolution process within 180 days.
The resolution process period can be extended to 270 days. Advocate Bishwajit Dubey, appearing on behalf of ICICI Bank, said JP Associates has defaulted on a payment of Rs 1,260 crore. JP Associates’ total debt stood at Rs 31,522 crore as on March 31, 2017, according to its annual report.
JP Associates figured in the second list of insolvency accounts which the RBI had sent to the banks in August 2017 asking them to resolve these cases outside the NCLT till December 2017. Failing this they would have to go for insolvency proceedings, the RBI had said. In June 2017 the lenders had approved a restructuring plan for JP Associates according to which its land parcels would be carved out into a special purpose vehicle for selling to prospective buyers on a long-term payment basis to reduce the company’s debt.
In June 2017 the company also managed to close the sale of its cement units to UltraTech Cement which brought down its debt by Rs 10,000 crore.
By October 2017, JP Associates had approved its demerger scheme of transferring its movable and immovable assets worth Rs 11,834 crore to Jaypee Infrastructure Development. The scheme was then sent to the RBI for approval. However, the Supreme Court finally changing its stance on insolvency of JP Associates subsidiary Jaypee Infratech made the RBI change its mind.
Jaypee Infratech was in the first insolvency list and the buyers had opposed it in the Supreme Court. The SC had initially stayed the insolvency and directed the RBI to do the same in the case of JP Associates. However, the SC finally in August 2018 allowed insolvency in Jaypee Infratech and gave a similar go-ahead in the case of JP Associates.