21 March 2019: Jyoti Structures was saved from going into liquidation after the National Company Law Appellate Tribunal (NCLAT) directed that a resolution plan for the company put forth by a group of ultra high-net-worth individuals led by Netmagic CEO Sharad Sanghi be accepted, albeit with minor modifications.
The company figured in the Reserve Bank of India’s first list of a dozen accounts of non-performing assets (NPAs) referred to insolvency courts. Overturning a July 2018 ruling by the NCLT that ordered liquidation of the engineering procurement construction company on the grounds that the requisite number of creditors had not voted in favour of the Sanghi-led consortium’s plan within the stipulated time frame, the NCLAT noted that though certain banks had initially abstained from voting or voted against the plan, the requisite quorum was achieved, though belatedly.
In an order, a copy of which was seen by ET, NCLAT chairman Justice SJ Mukhopadhaya said that no provision of the Insolvency and Bankruptcy Code bars creditors from changing their minds after voting has been conducted. “The date of approval for resolution plan is fixed by the committee of creditors. They may fix the date of voting and in appropriate case they may extend the period of voting,” Mukhopadhaya said.
Sanghi had appealed against the order to liquidate the company as the investor group led by him had offered to pay around 57% of the company’s dues of Rs 7,000 crore to banks over a staggered period of 15 years.
The NCLAT ordered a modification in the terms of the plan and directed that the offered amount be repaid to the banks over a period of 12 years. Jyoti Structures’ resolution professional Vandana Garg said, “We will be taking up the matter with the NCLT for implementation of the plan”.
Sanghi wasn’t available for comment.
StanChart Bank and Bank of India, which had initially opposed the resolution plan, eventually voted in its favour while Indian Bank, which had abstained from voting later, approved Sanghi’s resolution plan.
Jyoti Structures is a mid-sized company, specialising in power transmission, distribution and EPC projects.