Based on an NCLAT direction, the NCLT Mumbai Bench has cleared the resolution plan submitted by a group of investors lead by Sharad Sanghi, for Jyoti Structures.
Jyoti Structures is one of the twelve companies which were referred to IBC by the Reserve Bank of India in 2017. The application against Jyoti Structures was filed by the State Bank of India. From the RBI-12 list, this makes Jyoti Structures the fifth to have been resolved after Bhushan Steel, Monnet Ispat, Electrosteel Steels and Alok Industries. Amtek Auto was also a part of the list until its resolution applicant, Liberty House, defaulted. Lanco Infratech is the only liquidation from the twelve so far.
While Jyoti Structures had, in July last year, submitted a resolution plan for approval, the NCLT did not accept the resolution application. Last March, Sanghi’s resolution plan was voted by 62.66% of lenders, while 23.12% voted against, and 14.21% abstained. But later some lenders changed their minds and agreed to accept the proposal, taking the final tally of those lenders accepting the proposal at 81.31%.
The NCLT found that the votes which earlier did not favor resolution were subsequently changed after the 270-day deadline was over. On an appeal, the NCLAT in August directed the NCLT to not pass a liquidation order. More recently, the NCLAT found that the NCLT failed to account for the 8-day period which was consumed for the appointment of IRP, and thus the reversal of votes was within the 270 day period. It then directed the NCLT to consider the resolution plan.
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. Under the bid, which was amended earlier this week, Sanghi told NCLT that he will pay Rs. 3,965 crore in 12 years against the original bid of 15 years to the lenders. Further, under the revised plan, he will pay Rs. 147 crore will be paid to workmen, Rs 11 crore statutory dues will be paid immediately and the rest Rs. 115 crore will be paid to operational creditors over a period of seven years.
DBS bank, however, was asking for a stay on the proposed resolution as the plan does not give them any priority as ‘the first charge holder’. DBS bank has an exposure of around Rs. 53 crore to Jyoti Structures. DBS bank will approach the Supreme Court in this matter now.
