Jaiprakash Associates Ltd (JAL) faced a setback as lenders led by ICICI Bank rejected its modified one-time settlement proposal. The proposal, which offered higher upfront payment and sale of cement assets, was dismissed during a National Company Law Appellate Tribunal (NCLAT) hearing. JAL had increased its upfront payment offer from INR 200 crore to INR 500 crore following earlier rejections. The case stems from a six-year-old petition by ICICI Bank, resulting in JAL's board suspension and appointment of an interim resolution professional. With this rejection, JAL's attempts to settle debts outside insolvency proceedings have stalled. The NCLAT has scheduled the next hearing for July 26, highlighting ongoing challenges in resolving corporate financial distress.
Jaiprakash Associates Ltd (JAL), a debt-ridden company, faced a setback as its lenders, led by ICICI Bank, rejected a modified one-time settlement (OTS) proposal on Wednesday. This proposal had offered a higher upfront payment and the sale of JAL's cement assets to settle its debts. The rejection was announced during a hearing at the National Company Law Appellate Tribunal (NCLAT). ICICI Bank's representative, senior advocate Sajeev Sen, informed the tribunal about the lenders' decision and urged the NCLAT to proceed with the case on its merits.
The NCLAT was hearing an appeal by Sunil Kumar Sharma, a member of JAL's suspended board, against an order by the National Company Law Tribunal (NCLT) in Allahabad. On June 3, the NCLT had admitted a six-year-old petition filed by ICICI Bank in September 2018, appointing Bhuvan Madan as the interim resolution professional and suspending JAL's board. The NCLAT bench, including Chairperson Justice Ashok Bhushan, scheduled the next hearing for July 26 after a brief session.
Previously, on June 11, a vacation bench of the NCLAT had asked the lenders to consider JAL's OTS proposal submitted to the NCLT. In its earlier settlement offer to the NCLT, JAL had proposed an upfront payment of INR 200 crore, with the remaining balance of about INR 16,000 crore to be paid within 18 weeks of acceptance. However, the NCLT's Allahabad bench dismissed this proposal and ordered the initiation of the Corporate Insolvency Resolution Process (CIRP) against JAL. Following the NCLAT's suggestion to consider depositing a larger amount, JAL increased its upfront payment offer to INR 500 crore. This revised proposal included an additional deposit of INR 300 crore on top of the INR 200 crore already provided.
During the last hearing, JAL had expressed willingness to make the entire payment within 18 weeks if the banks accepted the OTS proposal. However, with the lenders' rejection of the modified OTS scheme, JAL's attempts to settle its debts outside the insolvency process have hit a roadblock. The case highlights the ongoing challenges faced by debt-laden companies in India's corporate sector and the complexities involved in resolving large-scale financial distress through settlement proposals and insolvency proceedings.
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