No guarantee: Jaiprakash Associates recovery may be hard for creditors

MUMBAI: Creditors to Jaiprakash Associates (JAL) will have to intensify efforts to recover dues from the company's hotel, cement and real estate businesses in Delhi, Agra, Noida and Mussoorie as personal guarantees given by the bankrupt infrastructure and real estate conglomerate's promoters are inadequate to meet their liabilities, documents accessed by ET showed.

Total guarantees of about Rs 778 crore given by JAL chairman and promoter Manoj Gaur are less than 2% of the ?52,000 crore dues of the group which was admitted to the bankruptcy court early last month, following a petition filed by ICICI Bank in 2018.

Bankers said guarantees by chairman Gaur and vice chairman Sunil Kumar Sharma totalling close to Rs 800 crore are of little consequence after nearly seven years since the company was first referred to bankruptcy by the Reserve Bank of India (RBI) in 2017 among the 26 large defaulters of bank loans during that period.


"Personal guarantees are just a comfort for banks and depend on the assets shown by promoters which in this case was years ago, so we are not really falling back on this. In this case, there are still some working assets in terms of hotel, cement or real estate properties which can be monetised hopefully for some recovery to creditors," said a banker.

Documents filed by the interim resolution professional (IRP) Bhuvan Madan show that State Bank of India (SBI) is the largest creditor with provisional admitted dues of more than Rs 15,000 crore, followed by ICICI Bank with Rs 9,204 crore.

Among the assets in which lenders have a first charge are JAL-owned hotels in Agra, Noida, Delhi and Mussoorie, five cement units in Churkt, Rewat, Sadhwa Khurd and Chunar, and the company's land holding in Yamuna Expressway Industrial Development Area near Noida.

"The guarantees by the promoters are a form of insurance because invoking a personal insolvency has civil as well as societal implications," said a second banker.