Insolvency appellate tribunal NCLAT has asked ICICI Bank to consider bankrupt Jaiprakash Associates Ltd‘s (JAL) one-time settlement proposal to clear its outstanding loans. The JAL has challenged an order by National Company Law Tribunal (NCLT), Allahabad earlier this month to initiate insolvency proceedings against the company.
While hearing the plea by the JAL, the National Company Law Appellate Tribunal (NCLAT) has issued a notice to ICICI Bank in this regard. It said the private sector lender may consider the one-time settlement (OTS) proposal submitted by debt-ridden JAL by June 24, the next date of hearing.
During the proceedings of the NCLAT, the JAL through its counsel submitted that the company is inclined to make the entire payment within 18 weeks, if the OTS is accepted by the bank. This was opposed by creditors alleging that the total debt is over Rs 26,000 crore.
Earlier, the JAL moved an OTS proposal to creditors before the NCLT, which had a provision of an upfront amount of Rs 200 crore and the balance of about Rs 16,000 crore to be paid on or before 18 weeks from its acceptance.
However, this was dismissed by the Allahabad bench of the NCLT and directed to initiate the Corporate Insolvency Resolution Process (CIRP) against JAL.
In its order, a two-member vacation bench of the NCLAT said that the JAL may also consider a deposit of some bigger amount by the next date of hearing.
“Considering the submission so made, notice is issued to the Respondents (ICICI Bank and IRP),” said the NCLAT order passed on Monday.
It further said: “Let the matter be now listed on June 24, 2024, within which period the Respondent Banks may file a reply and may consider the proposal/OTS submitted by the appellant by the said date. The appellant may also consider the deposit of some bigger amount by the next date.”
An application was moved by the Corporate Debtor (JAL) to defer the order in the company petition. However, NCLT on June 3, 2024, dismissed the application and initiated CIRP against the corporate debtor.
NCLAT was hearing a petition filed by Sunil Kumar Sharma, on behalf of the suspended Board of Directors of JAL, against the order passed by the NCLT.
On June 3, the Allahabad bench of NCLT admitted the six-year-old petition filed by ICICI Bank in September 2018 and appointed Bhuvan Madan as Interim Resolution Professional after suspending the board of JAL.
During the hearing of NCLAT, apprehensions of over 25,000 employees and continuation of various projects by JAL were also raised.
“… The same is answered by the counsel for the IRP that he has taken over the company as a running concern and no adverse impact shall be there in running its project or qua fate of such employees,” the four-page long NCLAT order noted.
Counsel appearing for JAL submitted that its entire debt is divided in three segments. The first segment consists of debt of Rs 11,689 crore, which is to be repaid through sale of plants to Ultratech Cement Ltd, which was accomplished in 2017 itself.
The second segment consists of debt of Rs 6,367 crore, which was to continue on new terms as per MRA dated October 31, 2017, which is still continuing and being served.
While the third segment consists of debt of Rs 13,590 crore.
NCLT, in its 120-page long order, rejected JAL’s contention that it faced a liquidity crunch and defaulted on debt repayments mainly due to delays in government approvals and prolonged litigation concerning land acquisition for Yamuna Expressway and changes in government policies.
It has been held by the Supreme Court that if there is a debt and default in repayment of debt and application filed by a financial creditor under Section 7 of Insolvency & Bankruptcy Code, then the insolvency plea is to be admitted, the NCLT had said.
