Suspended board of Jaiprakash Associates moves NCLAT, challenges insolvency proceedings - Hindustan Times
close_game
close_game

Suspended board of Jaiprakash Associates moves NCLAT, challenges insolvency proceedings

PTI |
Jun 10, 2024 04:08 PM IST

Suspended board of Jaiprakash Associates moves NCLAT, challenges NCLT order which directed initiation of insolvency proceedings against the firm

The suspended board of debt-ridden Jaiprakash Associates has moved appellate tribunal NCLAT challenging last week's NCLT order which directed initiation of insolvency proceedings against the firm.

The suspended board of debt-ridden Jaiprakash Associates has moved appellate tribunal NCLAT challenging last week's NCLT order which directed initiation of insolvency proceedings against the firm. (Picture for representational purposes only)(Pixabay)
The suspended board of debt-ridden Jaiprakash Associates has moved appellate tribunal NCLAT challenging last week's NCLT order which directed initiation of insolvency proceedings against the firm. (Picture for representational purposes only)(Pixabay)

The petition was listed before a vacation bench of the National Company Law Appellate Tribunal (NCLAT), which declined to grant an interim stay on the NCLT order.

Now catch your favourite game on Crickit. Anytime Anywhere. Find out how

On June 3, the Allahabad bench of National Company Law Tribunal (NCLT) admitted the insolvency plea filed by ICICI Bank. The tribunal also appointed Bhuvan Madan as Interim Resolution Professional of JAL after suspending the board of the company.

Also Read: NCLT rejects JAL's claim of liquidity crunch due to delay in govt approvals, litigations

In September 2018, ICICI Bank had filed an insolvency petition against JAL under Section 7 of IBC.

The NCLT rejected JAL’s contention that it faced a liquidity crunch and defaulted on debt repayments mainly due to delays in government approvals and prolonged litigation concerning land acquisition for Yamuna Expressway and changes in government policies.

It has been held by the Supreme Court that if there is a debt and default in repayment of debt and application filed by a financial creditor under Section 7 of Insolvency & Bankruptcy Code, then the insolvency plea is to be admitted, the NCLT had said.

Also Read: NCLT initiates insolvency against Jaiprakash Associates, admits ICICI Bank plea

The insolvency tribunal also rejected the submissions of JAL pleading not to initiate insolvency on grounds such as the feasibility of initiating CIRP, overall financial health and viability of the company and receivables which may go to meet the outstanding debts.

JAL had submitted that it is an "asset-rich company", even after sale of cement plants to resolve the loans under Bucket 1 and Bucket 2A.

Rejecting its contention, the Allahabad bench of NCLT had said, "If the Corporate Debtor (JAL) feels about its viability, feasibility and financial health , it would be more beneficial for it after its resolution under IBC is done expeditiously before its assets get depleted."

ICICI Bank had submitted that sale proceeds shown on account of sale of the cement plant by JAL to pare its debts of Bucket 2A and such sale proceed will not help in settling the debt of Bucket 2B.

Under Bucket 2A, JAL had an overall debt of 6,367 crore, which included 5,072 crore owed to the lenders.

The Master Restructuring Agreement (MRA) for JAL's sustainable debt was signed by all 32 relevant lenders before December 13, 2017.

Also Read: Competition commission slaps 14 crore fine on Jaiprakash Associates

Under Bucket 2B, transfer of assets and liabilities pertaining to a debt of 11,833.55 crore was to be completed through a Scheme of Arrangement.

This involved transferring the remaining debt and land of JAL to a 100 per cent real estate Special Purpose Vehicle (SPV), namely Jaypee Infrastructure Development Ltd.

However, ICICI Bank had submitted that receivable shown on account of arbitration was not finally determined and it was not certain as to when it would be received.

Moreover, 75 per cent of the amount which was claimed to be received as per the scheme of Niti Aayog, was also subject to giving bank guarantee.

Get World Cup ready with Crickit! From live scores to match stats, catch all the action here. Explore now!

See more

Get Current Updates on India News, Elections 2024, Lok sabha election 2024 voting live , Karnataka election 2024 live in Bengaluru , Election 2024 Date along with Latest News and Top Headlines from India and around the world.

SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Monday, June 17, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On