Economic Fraud
Jaiprakash Associates Bankruptcy: NARCL Set to Take Control in Rs 12,000 Crore Deal
The government-backed National Asset Reconstruction Company Ltd (NARCL) is poised to acquire Jaiprakash Associates Ltd (JAL) after no competing bids emerged for its Rs 12,000 crore offer. The deadline for rival bids, extended to January 14 by process advisor IDBI Capital Markets & Securities (ICMS), closed without challengers, solidifying NARCL’s position as the sole bidder.
A Landmark Resolution
JAL, a Noida-based conglomerate, owes Rs 57,177 crore to creditors, including Rs 15,465 crore to the State Bank of India and Rs 10,443 crore to ICICI Bank. NARCL’s bid offers a 23% recovery rate for lenders, structured as 15% cash and 85% government-guaranteed security receipts — a unique mechanism exclusive to NARCL. If finalized, this acquisition will be the largest in NARCL’s portfolio, marking a critical step for the company after a sluggish fiscal year.
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Key Developments in the Process
Earlier this month, nearly a dozen entities showed initial interest in JAL’s assets, but none matched or surpassed NARCL’s bid. “It was decided there is no point in extending the timeline since no serious bids are expected,” said a source familiar with the proceedings. The formal handover is expected to conclude by March, enabling lenders to record recoveries within the current fiscal year.
Background and Significance
JAL, one of India’s largest unresolved insolvency cases under the Insolvency and Bankruptcy Code (IBC), entered bankruptcy proceedings in 2017 following directives from the Reserve Bank of India. Legal disputes had stalled resolutions for years. NARCL’s bid aims to consolidate JAL’s valuable assets, which include:
- Operational cement plants with a combined capacity of over 9 million tonnes
- Real estate near the Yamuna Expressway
- Luxury hotels and a hospital
- Power plants and the Buddh International Circuit
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A Milestone in India’s Bankruptcy Resolutions
The Rs 12,000 crore offer ranks as one of India’s largest bankruptcy resolutions, second only to Videocon Industries’ Rs 65,000 crore insolvency case. JAL’s acquisition not only underscores the government’s commitment to resolving high-value distressed cases but also signals a turning point for NARCL, as it works to establish its role in India’s asset reconstruction landscape.
