Dedicated bankruptcy court National Company Law Tribunal (NCLT) approved a resolution plan for debt-laden Jyoti StructuresNSE 2.86 % for Rs 3,965 crore with about 45% haircut. A group of investors led by Sharad Sanghi, who heads the software firm Netmagic, is the sole bidder to acquire the company.
Mumbai-based Jyoti Structures was part of the first list of the Reserve Bank of India (RBI) when the central bank directed lenders approached NCLT for mandatory resolution of 12 companies after the original promoters failed to repay their dues.
On Wednesday, a Mumbai bench of the National Company Law Tribunal approved Sanghi’s revised bid after the appellate tribunal directed NCLT to take a second look at fresh bid of the sole bidder. Last week, NCLAT had set aside the liquidation of the stressed engineering and construction company, asking lenders instead to consider the resolution plan submitted by a consortium led by Sanghi. The plan offers to pay Rs 3,965 crore for the asset.
This included Rs 50 crore as upfront cash, Rs 75 crore in the next one year, and the remaining payment spread over 15 years. This period has now been revised to 12 years. The State Bank of India-led (SBI) led consortium had filed insolvency plea to recover dues of over Rs 7,000 crore from the company.
“Under the resolution plan, worker’s dues of around Rs 147 crore, statutory dues of around Rs 11 crore and around Rs 115 crore to operational creditors will have to be repaid on priority basis,” said the tribunal presided by VP Singh and Ravikumar Duraiswami.
“The banks will get over Rs 3,600 crore in tranches as per the resolution plan.”
The lenders of the company had approved the resolution plan with 81.31% voting in April 2018. However, the plan was rejected by the tribunal in July last year. On August 20, 2018, the NCLAT had ordered the Mumbai bench of the National Company Law Tribunal (NCLT) not to pass any order for the liquidation of Jyoti Structures. More recently, the appellate tribunal allowed an appeal by Sanghi and asked lenders to consider his offer and not take the company into liquidation.
With this, Jyoti Structures becomes the fifth company among the first list of 12 companies, where a resolution plan has been approved. Earlier, companies including Bhushan Steel, Electrosteels, Monnet Ispat & Energy and Alok Industries have already changed hands.
However, DBS Bank, one of the lenders to the company, opposed the revival plan, arguing the proposal is prejudiced against it.
The bank alleged that the plan does not distinguish between the first charge holder and second charge holder, and will be contesting the order in the Supreme Court.