InvestorQ : Why do the lenders of Jaiprakash Power want to withdraw the company from the NCLT process? What now happens to the settlement of the case?
Dhwani Mehta made post

Why do the lenders of Jaiprakash Power want to withdraw the company from the NCLT process? What now happens to the settlement of the case?

Answer
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Khushi Patel answered.
8 months ago


Jaiprakash Power Ventures has come across a unique and piquant situation wherein the lenders led by ICICI in the consortium, have restructured its debt by converting much of it into equity or convertible instruments. Now the same creditors have approached the National Company Law Tribunal (NCLT) to withdraw their application for starting of bankruptcy proceedings. It may be recollected that The outstanding debt of the Jaiprakash Associates group company had eventually reduced to less than Rs.6,000 crore sharply lower from the peak figure of Rs.11,000 crore a few years back. The terms also entail an interest write back of about Rs.2,000 crore that will help the company report a net profit in the current fiscal year.

It may be recollected that ICICI Bank had filed for initiating proceedings under the Insolvency and Bankruptcy Code against the company in 2018. However, last Friday, the bank moved an application before the Ahmadabad bench of NCLT for its withdrawal. Since the earlier petition is yet to be admitted, the bank will be allowed to withdraw it; going purely by the rule book. The consortium of lenders agreed to restructuring whereby they reduced outstanding loan of Rs.11,282 crore to Rs.5,800 crore. The balance was converted into equity or compulsorily convertible preference shares. This allows the lending banks to take a higher degree of operational risk but also strives to ensure that the NCLT outcome is down with minimal haircut.