ICICI Bank urges SC to consider Jaiprakash Associates, Jaypee Intratech as separate entities
2 min read . Updated: 17 Jul 2018, 10:39 PM IST
PremiumICICI bank also said restructuring was the best possible option for Jaiprakash Associates to manage its debt
New Delhi: ICICI Bank, the lead financial creditor for Jaiprakash Associates Ltd (JAL), on Tuesday urged the Supreme Court to consider JAL and its subsidiary Jaypee Intratech Ltd (JIL) as two separate entities in the ongoing legal battle with homebuyers and creditor banks.
If JAL is made to honour the debt of its subsidiary, there would be an adverse impact on the “complex contractual" obligations of JAL, ICICI Bank said. It further said that restructuring was the best possible option for JAL to manage its debt.
“JAL and JIL ought to be treated as distinct entities. JAL has to honour its own debt and not JIL’s...Let the statutory authorities consider what they are meant to consider," said the counsel appearing for ICICI Bank.
JAL has submitted a master-restructuring agreement (MRA), which has been approved by more than 30 banks, before the National Company Law Tribunal (NCLT), Allahabad bench, and is awaiting the Supreme Court’s direction to the tribunal to consider the MRA.
Meanwhile, the counsel appearing for one of the homebuyers told the Supreme Court on Tuesday that JAL had no “financial credibility" or “financial capacity" to honour the debt of JIL. He further sought reconstitution of the committee of creditors and invitation of fresh bids for JIL to revive the company and avoid liquidation.
Additional solicitor general of India Tushar Mehta, appearing for the Insolvency and Bankruptcy Board of India, submitted that according to the new amendment to the insolvency code, homebuyers qualified as financial creditors and could be a part of the committee of creditors for evaluation of the submitted resolution plans.
JIL features in the Reserve Bank of India’s first list of non-performing assets accounts and has debt exposure of over ₹ 9,783 crore in September 2017. IDBI Bank’s insolvency plea against JIL was admitted by NCLT in August 2017. The corporate insolvency resolution period for JIL expired unsuccessfully in May this year.
The parent company, JAL owes more than ₹ 29,000 crore to various banks.
The two debt-ridden companies are also embroiled in a litigation with several homebuyers over delay in completion of its housing projects.
The Supreme Court on 16 May had directed JAL to deposit ₹ 1,000 crore with its registry by 15 June to avert liquidation of JIL.
On an earlier occasion, the court directed JAL to deposit ₹ 2,000 crore to protect the interest of homebuyers. Out of this, only ₹ 750 crore has been deposited so far.
The matter would be next heard on Wednesday.
