NCLT asks RP of Jyoti Structures to submit revised resolution plan

The Mumbai bench of National Company Law Tribunal (NCLT) on Tuesday asked the Resolution Professional (RP) of Jyoti Structures to file the amended resolution plan for the debt ridden company for the tribunal’s approval.

Jyoti Structures is one of the first twelve companies that faced the insolvency proceedings after the law was enacted.

The group of investors, led by Sharad Sanghi, has revised their bid for the debt ridden company engaged in engineering, procurement and construction. According to the revised bid, Sharad Sanghi will pay Rs 3965 crore in 12 years as against the 15 year period sought by him in his previous bid.

The total debt of the company is to the tune of Rs 7010.55 crore. The banks will take a haircut of 43 per cent with as per the current resolution plan.

Earlier, the National Company Law Appellate Tribunal (NCLAT) had set aside the order of NCLT to liquidate Jyoti Structures and asked the tribunal to consider the resolution plan proposed by Sharad Sanghi and others and pass an order in the matter within two weeks. And the liquidation value assigned to the company was Rs 1,112.52 crore.

However, the Development Bank of Singapore (DBS), a financial creditor to the debt laden company, has decided to challenge the NCLAT order in Supreme Court. Their concern is that the resolution 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. The consortium of lenders was led by the State Bank of India (SBI).

The NCLT had earlier rejected the resolution plan submitted by Sharad Sanghi and had asked for liquidation of the company because the 270 day period assigned for corporate insolvency resolution process (CIRP) had expired.

Moreover, initially the resolution plan was not approved by the committee of creditors with a majority.

Earlier, Sanghi's resolution plan was voted by 62.66 per cent voting shares of the committee of creditors, while members with 23.12 per cent had voted against and the remaining 14.21 per cent remained abstained on March 26 and 27, 2018. Later, some members of CoC changed their plans and, finally, tally was reached to 81.31 percent of the total votes on April 2, 2018.