NCLT Approves GAIL's Rs 2,079 Crore Resolution Plan For JBF Petrochemicals
15 March 2023
The National Company Law Tribunal (NCLT) has approved the state-owned GAIL's Rs 2,079 crore resolution plan for JBF Petrochemicals, which owed Rs 7,918 crore to a consortium led by IDBI Bank. "We being satisfied approve the resolution plan submitted by GAIL (India) Limited.....the resolution applicant shall obtain necessary approvals required under any law for the time being in force within a period of one year from the date of approval of the resolution plan," the order issued by the NCLT Mumbai said on Monday.
The other secured lenders of the company are Union Bank of India, Bank of Baroda, Exim Bank and Indian Overseas Bank, among others. These lenders made a claim of Rs 4,584 crore, but NCLT admitted a total claim of Rs 4,662 crore. GAIL offered to pay the bankers Rs 2,015 crore, which is a 43.23 per cent recovery for them.
However, for the unsecured creditors and operational creditors, the recovery is much lower at 5.7 per cent and 6.9 per cent, respectively. The unsecured creditors had claimed Rs 1,329 crore, of which the tribunal admitted Rs 252.83 crore and the operational creditors had claimed Rs 1,905 crore and Rs 49.33 crore was approved. With this deal, GAIL became the second PSU after Indian Oil Corporation, which recently decided to take over another bankrupt private sector company Mercator through the IBC route.
JBF Petrochemicals, a subsidiary of polyester producer JBF Industries, was set up in September 2008 to operate a planned 1.25 mn tonnes per year purified terephthalic acid (PTA) plant at Mangalore, Karnataka. The plant, which is a backward integration project for JBF Industries' polyester plants, was commissioned in 2017 but stopped operations after the company defaulted on its loans in the same year. On February 1, 2022, JBF Petrochemicals' lenders, led by IDBI Bank, decided to initiate insolvency proceedings for the company and appointed Sundaresh Bhat as the Resolution Professional.
Source: Outlook India