The initial insolvency plea was filed by ICICI Bank in 2018, followed by SBI’s plea in 2022, which claimed a total default of Rs 6,893.15 crore.
The Allahabad bench of the National Company Law Tribunal (NCLT) directed the initiation of insolvency proceedings against debt-laden Jaiprakash Associates (JAL) on Monday. The insolvency plea against JAL was filed by ICICI Bank in 2018 and by State Bank of India in 2022.
The two-member NCLT bench also appointed an interim resolution professional (IRP). Jaiprakash Associates, the flagship firm of the Jaypee Group, operates primarily in construction, cement, and hospitality sectors. In recent years, JAL has sold several cement plants to reduce its debt burden.
ICICI Bank’s claim amounts to over Rs 3,000 crore, including interest. The initial insolvency plea was filed by ICICI Bank in 2018, followed by SBI’s plea in 2022, which claimed a total default of Rs 6,893.15 crore.
JAL was listed by the Reserve Bank of India among 26 major loan defaulters for initiating bankruptcy proceedings in August 2017. Several Jaypee Group companies, including Jaypee Cement Corporation, are currently undergoing insolvency proceedings before the NCLT. Another group company, Jaypee Infratech, is also amidst insolvency proceedings, with the National Company Law Appellate Tribunal (NCLAT) recently upholding the bid of Mumbai-based Suraksha Group.
Fresh default
Last month, JAL disclosed a default on April 30, with principal repayments amounting to Rs 1,751 crore and interest of Rs 2,865 crore. The company’s total borrowing, including interest, stands at Rs 29,805 crore, repayable by 2037, with Rs 4,616 crore overdue as of April 30, 2024.
The loans encompass various banks and cover fund-based working capital, non-fund-based working capital, term loans, and foreign currency convertible bonds. Out of the total borrowing, Rs 18,955 crore is expected to be transferred to a proposed special purpose vehicle. A scheme of arrangement, approved by all stakeholders, is pending NCLT sanction. The entire loan is currently under restructuring.
JAL has stated that it has been taking concrete steps to reduce borrowings. The proposed divestment of the cement business and the ongoing restructuring are expected to significantly reduce the company’s debt.
