Jyoti Structures first to come under NCLT bankruptcy proceedings
05 July 2017
The National Company Law Tribunal (NCLT) is reported to have given the go-ahead to a consortium of creditor banks led by State Bank of India to initiate bankruptcy proceedings against Jyoti Structures.
The company becomes the first among 33 large account holders to face proceedings under the new bankruptcy law. RBI has referred the 33 companies with aggregate debt of ing about Rs2,61,000 crore to the NCLT.
Jyoti Structures, an engineering, procurement and construction company in the power sector, reported net loss of Rs1,426 crore in FY17 against a net loss of Rs704 crore in FY16.
An auditor report said the company is facing a financial crunch due to losses incurred and inadequate liquidity, which resulted in delays in implementing contracted projects during FY17. The company's net worth turned negative at Rs1,384 crore as of March 2017 with its total liabilities exceeding its total assets by Rs6,850 crore.
''On account of its operational and financial position, the company has delayed payments to various parties and dues to statutory authorities and interest on such delays is not determined. These factors might impact the aspect of the going concern,'' it said.
Of the 33 large stressed accounts that the RBI has identified, 12 large stressed accounts, including Essar Steel, Bhushan Steel, Monnet Ispat, Alok Industries, Lanco Infratech, and ABG Shipyard, with total stressed loans of Rs7,000 crore, have been identified for immediate action.
RBI's internal advisory committee has now advised banks to focus on other large stressed accounts.