State Bank of India (SBI) has initiated insolvency proceedings against Jaiprakash Associates in the bankruptcy court over a loan default of Rs 6,893 crore. The move by SBI comes over five years after the Reserve Bank of India identified the construction company among the 26 cases for bankruptcy. In 2018, private lender ICICI Bank had also filed an insolvency plea against Jaiprakash Associates.
According to media reports, India’ largest lender submitted an insolvency plea with the Allahabad Bench of the National company Law Tribunal (NCLT) on September 19, 2022.
In its plea, SBI has proposed Bhuvan Madan as the resolution professional in the case.
Nearly 30 banks have exposure to Jaiprakash Associates, which has a total outstanding debt of Rs 27,000 crore to creditors. Jaiprakash Associates is the flagship company of the Jaypee Group.
If SBI’ plea is accepted by the NCLT, thousands of buyers in various projects of the construction company would be impacted.
Recall here that Jaiprakash Associates has now become the third company to face insolvency proceedings after Jaypee Infratech Limited (JIl) and Andhra Cements Limited. Five years after the insolvency proceedings were initiated against JIL, homebuyers are still waiting for their struck units in various housing projects of the group while a resolution remains evasive.
“We will respond to the petition and it has always been our intention to clear all dues of the bank. We have sold assets worth Rs 40,000 crore and we are confident of resolving the matter,” a senior Jaypee official was quoted by the media as saying.
