JP Associates tanks as RBI seeks SC's nod for insolvency proceeding

Even as investors are turning their attention to stocks such as Jaiprakash Associates (JP Associates) which were severely battered and dumped by the markets, RBI and banks are pushing ahead with insolvency proceedings against them.

Insolvency proceedings against a few companies were hindered due to pending cases against them in the Supreme Court. In view of this, Reserve Bank of India has sought permission from SC to start insolvency proceedings against Jaiprakash Associates (JP Associates) from January 10 onwards. Earlier in November, the apex court had barred the independent directors, promoters of JP Associates and their family members from transferring any personal assets or property without the SC’s permission.

In September, SC had stayed an order passed by the Allahabad bench of the National Company Law Tribunal (NCLT), which initiated insolvency proceedings against Jaypee Infratech. Jaiprakash Associates is the parent company of Jaypee Infratech. The apex court is hearing pleas filed by homebuyers of Jaypee Infratech project.

Earlier, RBI has ordered banks not to initiate bankruptcy proceedings against Jaiprakash Associates in anticipation of a legal hurdle with the SC order in place.
The company has a debt of around Rs. 29,000 crore. Of late, the company's stock was active on hopes of a possible restructuring of debt and a turnaround. But on Tuesday, the stock of Jaiprakash Associates closed at Rs. 23.60 per share, down 7.09 per cent.