Jaiprakash Associates: One of India’s largest bankruptcies is close to being resolved

The government-backed National Asset Reconstruction Corporation Limited (NARCL) will reportedly take control of Jaiprakash Associates Ltd (JAL) after no competing bids emerged for its Rs 12,000-crore offer.

Operations advisor IDBI Capital Markets & Securities (ICMS), which extended the bidding deadline by a week to January 14, received no bidders, confirming NARCL’s position as the sole bidder, according to several press reports.

JAL, a Noida-based conglomerate, owes Rs 57,177 crore to creditors, including Rs 15,465 crore to State Bank of India and Rs 10,443 crore to ICICI Bank. NARCL’s offer offers lenders a 23% recovery, which includes 15% cash and 85% government-guaranteed security receipts – a structure unique to NARCL. The acquisition, once completed, will be the largest in NARCL’s portfolio, a crucial step to boost its performance after a slow financial year.

Earlier this month, nearly a dozen entities expressed interest in JAL’s assets, but none matched or exceeded NARCL’s bid. “It was decided that there was no point in extending the timeline because no serious bids were expected,” a person familiar with the process said. The formal handover is expected to end by March, allowing lenders to record a recovery during 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 directions from the Reserve Bank of India. Legal battles have delayed decisions, but the NARCL takeover is on the verge of consolidating valuable assets, including cement plants operating with a capacity of more than 9 million tonnes, real estate near the Yamuna Expressway, luxury hotels, a hospital, power plants and the Buddh International Circuit. .

The Rs 12,000-crore bid is second only to Videocon Industries’ Rs 65,000-crore insolvency case in terms of debt size. As the largest decision in its history, the JAL acquisition represents a milestone in India’s efforts to resolve high-value distressed cases.