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NCLAT Contempt Ruling Unlocks Jyoti Structures Resolution
25 Feb
Summary
- Bank guarantees worth over INR1,350 crore were initially requested.
- A past dispute with Power Grid Corporation led to the company's downfall.
- A recent contempt order could finally implement the insolvency plan.
Lenders were initially requested to provide bank guarantees amounting to over INR1,350 crore. However, for more than four years, little progress was made. A recent contempt order issued by the National Company Law Appellate Tribunal (NCLAT) against the banks could now pave the way for Jyoti Structures' insolvency resolution plan to be fully implemented.
Several years prior, a significant falling out between Jyoti Structures' executives and a senior official from the state-owned Power Grid Corporation led to the company losing favour. This incident proved to be a major blow for Jyoti Structures, which specialized in power transmission lines, especially as business from the government monopoly was crucial.
The loss of this key business marked the commencement of a severe downturn for the company. This downward spiral ultimately resulted in Jyoti Structures entering insolvency, becoming one of twelve large bankruptcy cases selected for resolution.
