NCLT Admits SBI’s Insolvency Resolution Plea Against Jyoti Structures
Jyoti Structures now has 270 days to get a restructuring plan approved by the creditors and NCLT.
Power distribution equipment maker Jyoti Structures Ltd. has become the first large stressed company from the 12 identified by the central bank to go for resolution under the insolvency and bankruptcy law.
The Mumbai bench of the National Company Law Tribunal admitted an application against Jyoti Structures filed by its lead lender, the State Bank of India. The company owes lenders around Rs 7,000 crore, multiple bankers have told BloombergQuint, requesting anonymity.
The total amount due to SBI stands at Rs 1,601 crore, the bank’s lawyer said during the proceedings at the tribunal. The company initially owed Rs 1,227 crore to the state-run lender, according to the working capital consortium agreement extended in March 2012. The loan was restructured in September 2014.
Jyoti Structures is among the 12 companies that account for a quarter of India’s bad debt of about Rs 7.7 lakh crore. After the government armed the Reserve Bank of India to get directly involved in the resolution of non-performing assets, the central bank asked lenders to refer the dozen large stressed accounts for insolvency proceedings.
Vandana Garg, the business restructuring partner at BDO LLP, was also approved as Jyoti Structures’ interim insolvency resolution professional by the NCLT. Garg will be responsible for day-to-day operations of the company. She will also work with the committee of creditors to come up with a resolution plan, which will need the approval of the committee (75 percent of the votes) within 270 days, and then the nod from the NCLT. Failing this, the company will be liquidated according to the Insolvency and Bankruptcy Code rules.
While Jyoti Structures did not oppose the application on Thursday June 29, they had informed the bench that they were at an advanced stage of negotiations with a prospective buyer, and that they would like to sell the company as a going concern.