Insolvency-bound Jaiprakash Associates must be sold as one unit, not by dividing assets: NCLT

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.