Banks reject Jaiprakash Associate Limited’s one-time offer to settle dues

The banks have rejected the one-time settlement scheme that was proposed by debt-ridden Jaiprakash Associates Limited (JAL) to resolve its financial issues. The development came during a hearing before the National Company Law Appellate Tribunal (NCLAT), which is adjudicating a challenge to the insolvency proceedings ordered by the National Company Law Tribunal (NCLT)

The NCLT ordered the initiation of insolvency proceedings against the company on June 3, 2024, in response to a plea filed by bankers led by ICICI Bank.

Subsequently, one of the suspended board of directors, Sunil Kumar Sharma, challenged the NCLT’s order before the NCLAT, and sought relief from the corporate insolvency resolution process.

An application was moved by the Corporate Debtor to defer the order in the petition filed filed by ICICI Bank in September 2018 and order in this regard reserved by the NCLT on May 17, 2024.

During the hearing on June 10, JAL reiterated that the company is inclined to make the entire payment within 18 weeks if the OTS is accepted by the banks.

But JAL failed to get any relief and CIRP will be initiated against the company as it has failed to pay the money it owed to several banks.

During the hearing on Wednesday, counsel for the respondent banks submitted that the one time settlement proposal has not been accepted and prayed for a week’s time to file a reply.

“Counsel for the respondent bank submitted that the OTS proposal has not been accepted. He sought for and was allowed a week’s time to file a reply,” said a bench of chairman justice Ashok Bhushan, and members (technical) Barun Mitra and Arun Baroka.

“Rejoinder, if any, may be filed within one week, thereafter. Advocate Dave submits that he has already filed an IA on behalf of the homebuyers...,” reads the order.

Debt-ridden JAL on May 29, 2024, submitted before the NCLT a one-time settlement proposal (OTS) to clear its dues. JAL offered an upfront payment of ₹200 crore and the remaining amount of ₹16,000 crore to be paid within 18 weeks from its acceptance, said officials.

During the hearings, NCLAT asked JAL to improve its offer, following which JAL increased its upfront payment to ₹500 crore.

The debt-ridden construction and infrastructure company also offered to pay an additional ₹150 crore within 12 weeks as part of the revised OTS, besides assuring the lenders that the entire proceeds from the sale of its cement business would go to them.

The offer was vigorously objected to the by the banks which alleged that the company’s total debt was approximately ₹26000 crore and if they were serious of settling this debt, they ought to have paid a hefty amount upfront which would have enabled banks to take instructions on the OTS offer.

The next hearing will take place on July 26.