Jyoti Structures lender DBS Bank moves NCLT against resolution plan
Jyoti Structures was the first of the 12 accounts referred by the Reserve Bank of India for resolution under the insolvency and bankruptcy code to be admitted by NCLT
Mumbai: DBS Bank Ltd has approached the National Company Law Tribunal (NCLT), challenging the proposed bankruptcy resolution plan for Jyoti Structures Ltd.
The Singapore-based bank, which is one of the secured financial creditors of the beleaguered engineering, procurement and construction firm, in its petition, claimed the voting for the resolution plan was not conducted in a “fair manner”.
Jyoti Structures was the first of the 12 accounts referred by the Reserve Bank of India for resolution under the insolvency and bankruptcy code to be admitted by NCLT. The firm has total outstanding debt of Rs7,625 crore, of which it owes Rs1,961 crore to State Bank of India, the lead bank. DBS has a share of around 0.84% in the total secured debt. Emailed queries sent to a DBS Bank spokesperson did not elicit any response.
Dinyar Madon, the lawyer representing the resolution professional, said the bank has served a delayed notice to the resolution professional despite filing the petition at an earlier date.
“They (DBS) filed this application on April 12 but have served us the notice only on last Friday (May 4),” said senior counsel Madon. “This is nothing but delaying tactics,” he added. The matter will be heard next on 14 May.
A banker close to the development on condition of anonymity said DBS has been one of the dissenting creditors as it is likely to get more out of liquidation being a secured creditor with first charge.
To be sure, only one bid was received for Jyoti Structures from a bunch of high net-worth individual investors led by Sharad Sanghi, chief executive officer of Netmagic Solutions. The resolution plan involved an upfront payment of Rs170 crore and the balance to be repaid over 15 years.
Considering that the resolution plan entailed a deep haircut for the lenders, the resolution plan failed to muster the required 75% votes in favour of the plan from creditors during the online voting on 26 March.
On 2 April, the last day of the 270-day period, the resolution professional filed a petition in NCLT seeking extension of the deadline. The extension was sought as some of the creditors could not participate in online voting and wanted to send their votes for consideration offline. Also, some lenders who had rejected the plan earlier were willing to reconsider their stance. By 6 April, the RP was able to garner 81% votes and consequently submitted the plan for NCLT’s nod the same day.
Founded by K.R. Thakur in 1974, Jyoti Structures has executed several projects in India and overseas. The firm has one factory each in Nashik and Raipur and a testing station in Nashik.