MUMBAI: The National Company Law Appellate Tribunal (NCLAT) on Monday granted a stay on the liquidation order passed against construction engineering company Jyoti Structures Limited. The case will come up for next hearing on September 18, 2018.
The case of Jyoti Structures was the first one that headed for liquidation from the Reserve Bank of India’s first list of 12 large accounts shortlisted for insolvency proceedings in June 2017. It was admitted for proceedings under the Insolvency and Bankruptcy Code (IBC) in July 2017.
The order to stay the liquidation proceedings comes after investors led by Sharad Sanghi, founder, Netmagic Solutions, and 800 employees of the corporate debtor, appealed against it. Jyoti Structures owes about Rs 8,000 crore to its lenders. As part of the resolution plan, banks were to incur a haircut of about 60 per cent on the principal amount. Sanghi and a consortium of investors — including Madhusudan Kela, chief investment strategist at Reliance Capital, and Manish Kejriwal, managing partner of Kedaara Capital — were the only applicants interested in acquiring the company.
Their resolution plan was approved by 81 per cent of the lenders, more than the IBC-stipulated 66 per cent, but DBS Bank, one of the financial creditors, voted against the plan. Subsequently, the Corporate Insolvency and Resolution Process deadline of 270 days passed in July. The resolution professional sought an eight-day extension last month, which was again opposed by the DBS Bank. Consequently, the NCLT rejected the plan and asked the resolution professional to file for liquidation on July 25.