Insolvency-bound Jaiprakash Associates must be sold as one unit: NCLT

NCLT has said 'Form G' published by the resolution professional of JAL inviting Expression of Interest from prospective buyers

The National Company Law Tribunal (NCLT) has directed that the resolution plans to acquire Jaiprakash Associates through the insolvency process should be invited for the entire company as a going concern and not by dividing its different business verticals. 

NCLT has said 'Form G' published by the resolution professional of JAL inviting Expression of Interest (EOI) from prospective buyers "by giving two options at the threshold and the second option by splitting the business operations of JAL into multiple clusters being in violation of the provisions" of Insolvency & Bankruptcy Code (IBC). 

The Allahabad bench of NCLT said the process of two options "is untenable in law" as the IBC provides for the steps to be followed one after the other. 

The "Resolution Plans with respect to the clusters which are the assets of the Corporate Debtor (JAL) can be done only after the exhaustion of the first option where no Resolution Plan with the Corporate Debtor as a whole as a going concern has been received in the first instance," said a two-member bench in its 57-page order last Thursday. 

In the EoI, JAL's assets spread across different verticals were divided among eight clusters by the lenders - Real Estate, Investment in Jaiprakash Power Ventures (24 per cent), Cement, Hospitality, Investment in BJCL (74 per cent), Jaypee Fertilizers & Industries, Cricket Stadium & F1 Racetrack and EPC & Residual Entity. 

NCLT said that as the process of inviting EoI by publication of Form G has been initiated and option one already stipulates that measure, therefore the process being only with respect to option one may continue. 

"In view of our above decision, Form G published by RP shall continue with option one i.e. inviting Expression of Interest for the Corporate Debtor as a whole as a going concern, and option two is set aside i.e. cluster-wise expression of interest if any filed, will not be considered at this stage," the tribunal said. 

However, NCLT also said if no bids are received for JAL, then it may consider selling in tranches. "Needless to say the RP after due approval from the CoC would be at liberty to publish a fresh Form G if there are no Resolution Plans received for the Corporate Debtor (JAL) as a whole as a going concern, from the Prospective Resolution Applicants in the first instance by following option one," said NCLT. 

NCLT order came over the petition filed by Sunil Kumar Sharma, one of the members of the suspended board of JAL. He had requested the NCLT to quash and set aside agenda items 7 & 8 of the Committee of Creditors (CoC), which was passed by lenders with 81.80 per cent voting on December 19, 2024. 

The Corporate Insolvency Resolution Process (CIRP) was initiated against JAL by the Allahabad bench, Prayagraj on June 3, 2024. 

This has been challenged by the former promoters before appellate tribunal NCLAT, however, they have not received any stay so far on the process.