Jaiprakash Associates: India’s Mega Bankruptcy on the Brink of Resolution!
The government-backed National Asset Reconstruction Company Ltd (NARCL) is set to take control of Jaiprakash Associates Ltd (JAL) after no competing bids surfaced for its ₹12,000 crore offer. Process advisor IDBI Capital Markets & Securities (ICMS), which had extended the bid deadline by a week to January 14, received no challengers, solidifying NARCL’s position as the sole bidder, according to multiple newspaper reports.
JAL, a conglomerate based in Noida, owes ₹57,177 crore to creditors, including ₹15,465 crore to the State Bank of India and ₹10,443 crore to ICICI Bank. NARCL’s bid offers lenders a recovery of 23%, consisting of 15% cash and 85% government-guaranteed security receipts — a unique structure to NARCL. The acquisition, once finalized, will be the largest in NARCL’s portfolio, a crucial step to enhance its performance after a slow fiscal year.
Earlier this month, nearly a dozen entities expressed interest in JAL’s assets, but none matched or exceeded NARCL’s offer. It was determined that extending the timeline would be futile since no serious bids were anticipated, as per a source familiar with the process. The formal handover is expected to be completed by March, enabling lenders to record the recovery within the current fiscal year.
JAL, one of the largest unresolved insolvency cases under the Insolvency and Bankruptcy Code (IBC), entered bankruptcy proceedings in 2017 following directives from the Reserve Bank of India. Legal disputes have hindered resolutions, but NARCL’s takeover is set to consolidate valuable assets, including operational cement plants with a capacity of over 9 million tonnes, real estate near the Yamuna Expressway, luxury hotels, a hospital, power plants, and the Buddh International Circuit.
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The bid of ₹12,000 crore is the second largest in terms of debt magnitude, following Videocon Industries’ ₹65,000 crore insolvency case. JAL’s acquisition, the largest resolution in its history, represents a significant milestone in India’s ongoing efforts to resolve high-value distressed cases.
Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.