The debt-ridden company Jaiprakash Associates Limited has received a major setback. 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 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 has an investment in Jaiprakash Associates Ltd. Shares of Jaiprakash Associates Ltd closed down by Rs 0.68, or 4.40 per cent, at Rs 14.79 on the BSE.
On Monday afternoon, the two-member Allahabad bench of NCLAT passed the order to initiate the bankruptcy proceedings. This bench includes Praveen Gupta and Ashish Verma. Lawyers involved in the case said the bench directed the appointment of an Interim Resolution Professional (IRP) against JAL as well as the initiation of the Corporate Insolvency Resolution Process (CIRP). Along with this, the tribunal also rejected the merger of Jaiprakash Associates Limited with Jaypee Infrastructure Development Limited.
In September 2018, private sector ICICI Bank filed a petition to initiate insolvency proceedings against JAL under Section 7 of the Insolvency and Bankruptcy Code (IBC). Besides, the country's largest lender SBI also approached the NCLT against JAL, claiming a 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 to start insolvency proceedings in August 2017. Several group companies, including Jaypee Cement Corporation, are currently facing insolvency proceedings before the NCLT. The NCLAT on Jaypee Infratech, a group company that is also undergoing insolvency proceedings, was upheld by a Mumbai-based security group's bid. Jaiprakash Associates had said last month that it defaulted on the principal loan amount of Rs 1,751 crore and interest of Rs 2,865 crore on April 30. According to JAL, its total debt (including interest) is Rs 29,805 crore, due by 2037. Of this, only Rs 4,616 crore is due till April 2024.
JAL had said that Rs 18,955 crore of its total borrowings would be transferred to a proposed special vehicle (SPV). The plan for this, has been duly approved by all the stakeholders, pending the approval of NCLT.
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