Shares of Jaiprakash Associates Ltd (JP Associates) climbed for the fourth consecutive session, reaching a 5% upper circuit limit at ₹6.99 on Wednesday. This marks a notable 16% gain over three sessions, although the stock remains down by 67.35% year-to-date. Earlier this year, in February, it hit a 52-week high of ₹27.17.
Proposed Settlement to Avoid Insolvency
JP Associates is reportedly taking significant steps to avoid bankruptcy by offering a ₹16,000 crore settlement to its lenders. As part of this proposal:
- ₹4,000 crore upfront payment will be made nine months after lender approval.
- The remaining ₹12,000 crore is proposed to be settled over three years.
To meet these commitments, the company plans to secure funding by bringing in investors and selling assets. This proactive approach underscores the company’s efforts to regain financial stability.
Banks Evaluate Settlement Offer
The proposed settlement has garnered mixed reactions. According to sources cited by The Economic Times:
- Banks are skeptical about the ₹12,000-crore offer due to its long payment timeline and underlying assumptions.
- Feedback has reportedly been communicated to JP Associates, highlighting concerns over the feasibility of the proposal.
Simultaneously, banks are also assessing an offer from the National Asset Reconstruction Company Limited (NARCL) for the same amount. However, the NARCL's terms also appear unappealing due to a lengthy payment structure.
Insolvency Proceedings and Legal Challenges
The company’s appeal against insolvency admission is currently pending before the National Company Law Appellate Tribunal (NCLAT). Notably:
- With admitted claims total ₹57,190 crore, JP Associates ranks as the second-largest unresolved insolvency case under the National Company Law Tribunal (NCLT).
- The largest unresolved insolvency case involves Videocon Industries, with claims amounting to ₹65,000 crore.
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