NCLT Allahabad Clears Adani’s Rs. 15,000 Crore Resolution Plan, Orders Complete Wipeout of Shareholder Equity
NCLT Allahabad Clears Adani’s Rs. 15,000 Crore Resolution Plan, Orders Complete Wipeout of Shareholder Equity
Introduction
The NCLT Allahabad Bench approved the ₹15,000 crore resolution plan submitted by Adani Enterprises Limited for Jaiprakash Associates Limited, marking a significant development in one of India’s large insolvency cases. The Tribunal’s approval cleared the way for implementation of the plan within a stipulated timeline under the Insolvency and Bankruptcy Code, 2016.
Factual Background
Jaiprakash Associates Limited, engaged in construction, cement, and hospitality sectors, had been facing prolonged financial distress and had undertaken asset sales in an attempt to reduce debt. The company was also identified among major loan defaulters by the Reserve Bank of India in 2017. The corporate debtor had accumulated substantial liabilities, with claims exceeding ₹3,000 crore from ICICI Bank and ₹6,893.15 crore from State Bank of India, among others. Despite these efforts, the financial position of the company continued to deteriorate, necessitating insolvency proceedings.
Procedural Background
The Corporate Insolvency Resolution Process was initiated pursuant to a petition filed by ICICI Bank and admitted by the NCLT on June 3, 2024. During the CIRP, multiple resolution applicants submitted bids, including Vedanta and Adani Enterprises Limited. Although Vedanta submitted a higher overall bid of approximately ₹17,000 crore, the Committee of Creditors approved Adani’s plan, considering its stronger upfront payment structure. The resolution plan was subsequently placed before the NCLT for approval, which was granted on March 17, 2026.
Issues
1. Whether the resolution plan approved by the Committee of Creditors satisfies the requirements of the Insolvency and Bankruptcy Code.
2. Whether the Adjudicating Authority should approve the resolution plan for implementation.
Contentions of Parties
The resolution applicant, Adani Enterprises Limited, submitted a comprehensive resolution plan providing for payment to creditors and revival of the corporate debtor within a defined timeline. The Committee of Creditors supported the plan, emphasizing its commercial viability and stronger upfront payment structure compared to competing bids. There was no substantial opposition recorded at the stage of approval before the Tribunal.
Reasoning and Analysis
The Tribunal, while approving the plan, took note of the approval granted by the Committee of Creditors in exercise of its commercial wisdom. It observed that the plan met the requirements of the Insolvency and Bankruptcy Code and provided a viable framework for resolution of the corporate debtor. The Tribunal also considered the financial position of the company and noted that the liquidation value was insufficient to satisfy the claims of secured creditors. In such circumstances, the approved resolution plan was found to be a more beneficial outcome compared to liquidation. The Tribunal further noted that, as per the plan, implementation would be completed within 90 days and that regulatory disclosures had been made in compliance with applicable securities laws.
Decision
The bench of Judicial Member Praveen Gupta and Technical Member Ashish Verma approved the resolution plan submitted by Adani Enterprises Limited for Jaiprakash Associates Limited. It directed that the plan be implemented within 90 days and recorded that the entire pre-CIRP share capital of the corporate debtor would stand cancelled and extinguished without any payment to existing shareholders.
