NCLAT Sets Aside Jyoti Structures Liquidation, Asks NCLT To Consider Rs 4,000-Crore Plan
The National Company Law Appellate Tribunal has set aside the order to liquidate Jyoti Structures Ltd. and asked the Mumbai bench of NCLT to consider the Rs 4,000-crore resolution plan submitted by Sharad Sanghi and others.
Allowing the appeal filed by Sanghi in this regard, a two-member bench headed by Chairman Justice SJ Mukhopadhaya has remitted back the matter to the Mumbai-bench of the National Company Law Tribunal, directing it to pass an order within two weeks.
“The case is remitted to the Adjudicating Authority, Mumbai Bench (NCLT), Mumbai to approve the plan.” said NCLAT in its order.
The appropriate order be passed on an early date preferably within two weeks from the date of the production of the copy of this order.NCLAT Order On Jyoti Structures
The NCLT had on July 31, 2018, rejected the resolution plan submitted by Sanghi and had passed an order to liquidate Jyoti Structures, which had a debt of Rs 7,010.55 crore.
According to the Rs 3,965.06-crore resolution plan submitted by Sanghi, managing director and chief executive officer of information technology solutions provider Netmagic, along with others, Rs 50 crore will come as an upfront payment followed by Rs 75 crore in the next one year.
While, the remaining will come as staggered payments in 15 years from the effective date.
Earlier, Sanghi's resolution plan was voted by 62.66 percent voting shares of the committee of creditors, while members with 23.12 percent had voted against and the remaining 14.21 percent remained abstained on March 26 and 27, 2018.
Later, some members of CoC changed their plans and, finally, tally was reached to 81.31 percent of the total votes on April 2, 2018.
However, Sanghi's resolution plan was rejected by the NCLT on the two grounds, as total period of 270 days as mandated under the Insolvency and Bankruptcy Code had lapsed by the time last voting took place on April 2, 2018, and was approved with majority.
Secondly, as on March 26 and 27, 2018, the voting percentage was 62.66 percent which is less than 75 percent votes of financial creditors.
The order was challenged by Sanghi before the NCLAT, which had in August last year stayed the liquidation process.
The appellate tribunal said NCLT had not considered the eight-day gap between the company being admitted under the corporate insolvency resolution process and the appointment of interim resolution professional for the company.
“In the present case, as the application was admitted on July 4, 2017 and after signature it was uploaded on July 12, 2017 i.e. eight days and the 'Interim Resolution Professional' joined much thereafter, we are of the view that the Adjudicating Authority should have excluded at least eight days of period during which the order was passed, signed and subsequently uploaded,” said NCLAT said in its judgement passed last week.
“If the aforesaid period of eight days is excluded, then we find that the resolution plan was approved within 270 days which the adjudicating authority has failed to notice,” it said further.
Jyoti Structures had a liquidation value of Rs 1,112.52 crore, while the resolution plan has 43 percent haircut to the creditors of the company.
It was among the 12 companies in the first list issued by the government to face the insolvency proceedings in June 2017.