The state-owned GAIL's Rs 2,079 crore resolution plan for JBF Petrochemicals, which owed Rs 7,918 crore to a consortium led by IDBI Bank, has been approved by the National Company Law Tribunal (NCLT). The NCLT Mumbai's judgement stated, "We are satisfied and approve the resolution plan filed by GAIL (India) Limited. The resolution applicant shall obtain essential clearances required under any laws currently in effect within a period of one year from the date of approval of the resolution plan. Union Bank of India, Bank of Baroda, Exim Bank, and Indian Overseas Bank are only a few of the company's other secured
lenders. Although NCLT acknowledged a total claim of Rs 4,662 crore, these lenders made a claim of Rs 4,584 crore. GAIL promised to pay the bankers Rs 2,015 crore, or a recovery of 43.23 percent.
However, the recovery is substantially lower for operational creditors and unsecured creditors, coming in at 5.7% and 6.9%, respectively. The operational creditors had requested Rs 1,905 crore, of which Rs 49.33 crore was accepted, while the unsecured creditors had requested Rs 1,329 crore, of which the tribunal had granted Rs 252.83 crore.
With this transaction, GAIL joined Indian Oil Corporation as the second PSU. Indian Oil has opted to use the IBC method to acquire the bankrupt Mercator. JBF Petrochemicals was established in September 2008 to run a proposed 1.25 million tonnes per year purified terephthalic acid (PTA) factory at Mangalore, Karnataka. JBF Petrochemicals is a subsidiary of polyester manufacturer JBF Industries.
The plant, which was commissioned in 2017 and is a backward integration project for JBF Industries' polyester factories, ceased operations because the company couldn't pay its loans that same year. The lenders of JBF Petrochemicals opted to begin bankruptcy proceedings for the business on February 1, 2022, and Sundaresh Bhat was chosen as the Resolution Professional.