National Company Law Tribunal initiates its First action under Insolvency & Bankruptcy Code

July 4, 2017

The defaulter company failed to repay its Rs 7,000 crore worth of debt to lenders.

On Tuesday, National Company Law Tribunal (NCLT) allowed initiation of bankruptcy proceedings against Mumbai-based Jyoti Structures under the Insolvency & Bankruptcy Code after this company failed to repay its ₹7000 crore worth of debt to its lenders.

With this the company became the 1st entity against which NCLT cleared action after Reserve Bank of India [RBI] identified twelve firms struggling in the respect.

The Reserve Bank of India had even nudged banks to take action against identified firms under the Insolvency & Bankruptcy Code.

On Tuesday, as per the NCLT order issued the board of directors of the company'll be suspended & consultancy firm, BDO would manage the company. The company hasn't opposed the action by the banks so far & has informed the court about a potential buyer who's interested in taking over the firm.

In the financial year 2017, the company made a huge loss of ₹1482 crore on revenues of ₹852 crore.

On an earlier occasion, company had said that despite its best efforts, the restructuring package as envisaged by JLF (Joint Lenders Forum), couldn't be successfully implemented & the banks didn't release the enhanced working capital facilities.

This company wasn't able to adhere to milestones stipulated in the restructuring package & lenders had to invoke the Strategic Debt Restructuring Scheme (SDR) in terms of the extant Reserve Bank of India guidelines.

Since then, the lenders decided to restructure the debt, the company has informed its shareholders last year.

JSL supplies equipment & undertakes turnkey solutions of Power Grid Corporation of India Limited (PGCIL) & National Thermal Power Corporation (NTPC).