In a last-ditch attempt to stave off liquidation, the resolution professional (RP) of debt-ridden Jyoti Structures Ltd approached the bankruptcy court on 2 April—the deadline for clearing an insolvency resolution plan—seeking additional time to secure the mandatory 75% consensus from lenders, two people close to the development said.
The RP also filed the resolution plan before the Mumbai bench of the National Company Law Tribunal (NCLT) on Friday, which will be heard on Monday.
Vandana Garg, resolution professional of the engineering, procurement and construction firm that owes Rs7,000 crore to its lenders, confirmed filing the petition, but declined to share details.
“As on 6 April, 81% lenders have agreed on the resolution plan. Some of the creditors who did not participate in the online voting process have sent in documents manually giving their consent,” said one of the two persons mentioned earlier, on the condition of anonymity. On Friday, the resolution plan was submitted for NCLT’s approval. The hearing is slated for Monday.
Jyoti Structures was in the first list of 12 large accounts referred by the Reserve Bank of India for resolution under the insolvency and bankruptcy code (IBC). Under the code, a resolution plan has to be arrived at within a period of 270 days, failing which the firm goes to liquidation.
Jyoti Structures was the first of the 12 firms to be admitted for insolvency proceedings on 4 July. The RP had received only one bid from a group of high net worth individuals led by Sharad Sanghi, managing director and chief executive of Netmagic Solutions. State Bank of India is the lead bank. The window for submitting bids was open from 12 September to 29 December.
The resolution plan submitted was put to vote through an online process on 26 March, but could not get 75% of votes. “The application was filed with the NCLT as some lenders who did not participate in the online voting process were sending in their votes manually. Also, some lenders have reconsidered their rejection,” said the second person, also on condition of anonymity.
The fate of the Mumbai-based firm now hinges on NCLT’s decision. It is also likely to set a benchmark for future cases where the deadline is nearing and resolution plan has not been finalized. Also, it will offer guidance for cases where the deadline is around the corner and decision by court still pending. Jyoti Structures owes around Rs7,000 crore to its lenders.
“As per the resolution plan submitted, Sanghi, along with other investors will be infusing Rs170 crore initially and will be doing further repayments over a period of 15 years,” the second person said. He further said the company will be run by professionally-governed board.
“The plan is balanced and takes care of operational creditors and employees and other stakeholders to the extent possible in the available circumstances,” the first person said. The deal, however, will entail a deep haircut for lenders in the short term.
Source: Mint