NCLAT stays liquidation process of Jyoti Structures1 min read . Updated: 20 Aug 2018, 11:05 PM IST
Jyoti Structures owes around 7,625 crore to a group of lenders, including 1,961 crore to State Bank of India
New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Monday granted interim stay on the liquation order against Jyoti Structures Ltd.
The three-judge NCLAT bench headed by Justice S.J. Mukhopadhyay was hearing a plea filed by more than 800 employees of the corporate debtor and a group of investors led by Sharad Sanghi, the chief executive of Netmagic Solutions, against the liquidation.
In July, the Mumbai bench of the National Company Law Tribunal (NCLT) had ordered liquidation of the debt-ridden company after it rejected the resolution plan submitted by resolution professional (RP) Vandana Garg.
The Mumbai-based contractor received only one bid from a consortium of investors led by Sanghi. The resolution plan involved an upfront payment of ₹ 170 crore. The remaining amount was to be repaid over 15 years. The construction firm owes around ₹ 7,625 crore to a group of lenders, including ₹ 1,961 crore to State Bank of India. Under the Insolvency and Bankruptcy Code, a resolution plan has to be arrived at within 270 days, failing which the firm goes into liquidation.
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 NCLT in May opposing the plan.
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 September.