NCLT Ahmedabad Approves GAIL India’s Resolution Plan For JBF Petrochemicals
NCLT Ahmedabad has approved a 2079 crore resolution plan of GAIL (India) Limited (“GAIL”) for JBF Petrochemicals under section 31 (1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”). This is the second instance of a state-owned company acquiring a private sector bankrupt company , with the first being Indian Oil Corporation acquiring Mercator under IBC. JBF Petrochemicals...
NCLT Ahmedabad has approved a 2079 crore resolution plan of GAIL (India) Limited (“GAIL”) for JBF Petrochemicals under section 31 (1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”). This is the second instance of a state-owned company acquiring a private sector bankrupt company , with the first being Indian Oil Corporation acquiring Mercator under IBC.
JBF Petrochemicals was admitted into Corporate Insolvency Resolution Process (“CIRP”) vide an order dated 28.01.2022. The consortium, led by IDBI bank, claimed 7918 crores from JBF Petrochemical, out of which the NCLT admitted a claim of 5628 crores. The Secured Financial Lenders claimed an amount of 4684 crores but the NCLT admitted a claim of 4662 crores, out of which the resolution plan by GAIL offered the Secured Lenders 2015 crores, which is a 43.23% recovery. The Unsecured Financial Creditors claimed an amount of 1329 crores and the NCLT admitted a claim of 252 crores, out of which the resolution plan offered 14 crores, which is only a 5.7% recovery. Lastly, the Operational Creditors claimed an amount of 1904 crores and the tribunal admitted a claim of 712 crores, out of which the resolution plan offered 49 crores which is a 6.92% recovery.
The NCLT being satisfied approved the resolution plan and ordered that GAIL has to obtain the necessary approvals under the law of India within 1 year from the date of approval of the resolution plan under section 31 IBC or within such period as provided by the law, whichever is later.
The Secured Financial Lenders of the Debtor included, inter alia, IDBI Bank, Union Bank of India, Indian Overseas Bank, Union Bank of India. The consortium had received Resolution Plans from 3 applicants i.e. Consortium of Indian Oil Corporation and ONGC limited, MPCI Private Limited and GAIL. The Committee of Creditors had approved the resolution plan by GAIL with 100% voting share.
JBF Petrochemicals is a backward integration project set up by JBF Industries in partnership with KKR to supply Purified Terephthalic Acid (PTA) to JBF Industries. A plant was setup in Manglore, Karnataka for supply of PTA but it was decommissioned when the company defaulted in its loans.
Case Name:IDBI Bank Limited vs JBF Petrochemicals Limited
Case No. :Case No. IA No. 899/AHM/2022 in the matter CP (IB) 232/AHM2018