Jyoti Structures: NCLT admits corporate insolvency resolution process filed by SBI
Jyoti Structures which owes over Rs 7,000 crore to a list of bankers said on Monday that NCLT has admitted CIRP filed by SBI to whom its owes over Rs 1,200 crore.
- Jyoti Structures owes over Rs 7,000 crore to bankers
- Jyoti Structures defaulted over Rs 1,200 crore to SBI
- Jyoti Structures first company to go for bankruptcy process
Jyoti Structures on Monday said that the NCLT has admitted a corporate insolvency resolution process (CIRP) filed by its lead lender State Bank of India (SBI).
In a statement, Jyoti Structures said, “The application for initiation of corporate insolvency resolution process (CIRP) u/s 7 of the Insolvency & Bankruptcy code, 2016 (IBC) filed by the financial creditor, State Bank of India (SBI) in the matter of Jyoti Structures has been admitted by the Hon'ble National Company Law Tribunal, Mumbai (NCLT) ordering commencement of CIRP.”
This power distribution equipment maker became the first company among the 12 defaulters identified by the Reserve Bank of India (RBI) to go under bankruptcy process.
The company owes over Rs 7,000 crore to a list of bankers – among which it initially owed Rs 1,227 crore to SBI.
Financial creditor/ Operational Creditor or Corporate Debtor as the case may be, can initiate CIRP by application to NCLT under section 7 (financial creditor), 9 (operational creditor) and 10 (corporate applicant) respectively.
A financial creditor on default and operational creditor after ten days from the date of delivery of demand notice can initiate CIRP.
NCLT, within 14 days of receipt of application by order, admit or reject application (before rejecting give notice to rectify the detect within 7 days of receipt notice).
As per Section 17 of the IBC, the powers of the Board of Directors of Jyoti Structures Limited stands suspended and such powers shall be vested with the undersigned Ms Vandana Garg appointed as the Insolvency Resolution Professional.
On July 04, 2017, the NCLT Mumbai bench prohibited the following items in matter of Jyoti Structures.
- The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority.
- Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein.
- Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the secularization and reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
On June 13, 2017, RBI through its Internal Advisory Committee (IAC) recognised 12 accounts for resolution under Insolvency & Bankruptcy code (IBC).
These 12 accounts constituted about 25% of banks gross NPAs - who are struggling with a bad debt of over Rs 7 lakh crore presently.
Beginning from June 19, 2017, banks have been meeting to discuss these accounts named by the RBI and are referring accounts to the National Company Law Tribunal (NCLT).