NCLAT Refuses To Stay Jaiprakash Associates’ Insolvency Process
NCLAT Refuses To Stay Jaiprakash Associates’ Insolvency Process
The National Company Law Appellate Tribunal (NCLAT) has declined to halt an NCLT ruling that admitted infrastructure company Jaiprakash Associates Limited to the insolvency resolution process. On June 10, NCLAT stated that the Interim Resolution Professional assured that neither the company’s 25,000 employees nor its ongoing projects would be impacted, as the IRP intended to continue business operations as usual.
Sunil Kumar Sharma, a suspended company director, had requested the stay, expressing concerns that the insolvency order endangered numerous infrastructure projects in India and abroad. He mentioned that the company had proposed a One Time Settlement (OTS) plan, but the NCLT admitted it to insolvency before a decision could be made. Sharma noted that the company had already paid Rs. 200 crore of the Rs. 1200 crore owed to ICICI Bank. He claimed that the OTS would have been resolved within four and a half months if the NCLT had not issued the insolvency order.
ICICI Bank, argued that the case was more complex than portrayed and urged NCLAT not to halt the insolvency process. Sen emphasized that the company owed over Rs 30,000 crore to various banks, with Rs 1,200 crore to ICICI, warning against setting a precedent by staying the proceedings.
The legal battle over this case has spanned a decade, with Jaiprakash Associates attempting to delay insolvency proceedings using various excuses. Despite this, a vacation bench of NCLAT refused to stay the NCLT Allahabad bench's order, indicating it would issue a detailed directive to the lenders.
Jaiprakash Associates carries a debt burden of Rs 29,361 crore, inclusive of interest, with 22 lenders having exposure to its debt. In December 2022, Jaiprakash Associates and Dalmia Bharat agreed to a framework for the acquisition of JAL's cement, clinker, and power plants for an enterprise value of Rs. 5,666 crore.
The NCLAT has directed banks to respond to the appeal and asked them to consider the company’s one-time settlement offer. The case will now be heard on June 24.
