The National Company Law Tribunal (NCLT) in Mumbai has rejected the resolution plan submitted for Jyoti Structures' and has directed the resolution professional (RP) appointed to the insolvency firm to file applications for the liquidation of the engineering, procurement and construction company. This is the first case out of the Reserve Bank of India's first list of 12 large stressed corporates referred to the bankruptcy court, that has been directed to go for liquidation.
The engineering, procurement and construction company owes lenders around Rs 80 billion and was admitted for proceedings under the Insolvency and Bankruptcy Code (IBC) on 04 July 2017.
Justice B S V Prakash Kumar and Justice Duraiswamy stated in court on Wednesday that the final order will be provided on Friday, 27 July. The Corporate Insolvency and Resolution Process for the company has gone on for over one year, well beyond the 270-day deadline prescribed under the IBC.
According to the resolution plan submitted by a clutch of high-net-worth investors led by Sharad Sanghi, chief of net magic solutions, lenders would have had to incur haircut of 81 per cent on the principal loan amount. The investors offered to infuse around Rs 1.5 billion to Rs 1.7 billion in equity capital over the next 15 years while paying the lenders Rs 30 billion up-front.
While 81 per cent of the lenders to the company had at last count voted in favour of the resolution plan, the tribunal chose to reject the offer and direct the RP to file for liquidation on Monday, 30 July.