The National Company Law Appellate Tribunal (NCLAT) on Thursday ordered the sole resolution applicant of debt-ridden Jyoti Structures Ltd. to revise its resolution plan.
The Mumbai-based contractor received only one bid from a consortium of investors led by Sharad Sanghi, the chief executive of Netmagic Solutions. The resolution plan involved an upfront payment of ₹170 crore. The remaining amount was to be repaid over 15 years.
According to NCLAT, the revised plan should have a reduced repayment period of 5 years as opposed to the 15 years period and a higher upfront payment amount should be introduced to prove the intent of taking over the bankrupt company.
“Cut down the repayment period; make everybody equal. Let there be win-win position for all. We do not want liquidation but if someone forces us then we’ll have to go for it,” said the two-judge NCLAT bench headed by Justice S.J. Mukhopadhyay.
The construction firm owes around ₹7,364 crore to a group of lenders, including ₹1,875 crore to State Bank of India.
According to a person familiar with the matter, Sanghi has offered ₹3,674 crore to financial creditors to be paid over a period of 15 years for dues amounting to ₹6,405 crore.
The appellate tribunal also sought details of repayment from the resolution applicant. “You will have to provide us with the details of the following–from where will you be generating money for repayment and how will you make upfront payment?,” the bench said.
In its last hearing, NCLAT had granted interim stay on the liquidation order against Jyoti Structures Ltd. Under the Insolvency and Bankruptcy Code, a resolution plan has to be arrived at within 270 days, failing which the firm goes into liquidation.
In July, the Mumbai bench of the National Company Law Tribunal(NCLT) had rejected the resolution plan submitted by resolution professional (RP) Vandana Garg.
Considering that the resolution plan entailed a deep haircut, it initially failed to garner the required 75% of votes from creditors in favour of the plan during online voting on 26 March. On 2 April, the last day of the 270-day period, the RP filed a plea in NCLT seeking an extension of the deadline, as some creditors could not participate in online voting and wanted to send their votes for consideration.
Some lenders who had rejected the plan were willing to reconsider their stance. By 6 April, the RP was able to garner 81% of votes.
One of the secured lenders DBS Bank, which has a share of 0.84% of the total secured debt, moved NCLAT opposing the plan.
Currently, DBS Bank, IndusInd Bank and Allahabad Bank together represent 19% of the dissenting votes.
Jyoti Structures has earned the dubious distinction of being the first among 12 large corporate defaulters identified by the Reserve Bank of India for insolvency resolution under a new law to head for liquidation after a bankruptcy court rejected the resolution plan.
The next hearing of the matter in NCLAT will be held on 18 December.
Source: Livemint, November 29,2018