Jyoti Structures' bondholders may force firm into bankruptcy

MUMBAI: Bondholders of Jyoti Structures are looking to force a bankruptcy on the company if it is unable to seal a deal with the Dubai-based Amin Group in the next few weeks, two people familiar with the matter told ET.

The Mumbai-based power transmission EPC (engineering, procurement and construction) service provider, which defaulted on `2,000 crore of bank loans, has been negotiating to sell a controlling stake to Amin Group for the last six months. But, the lenders lead by State Bank of India are yet to give a final nod to the said deal.

ET in its edition on June 17 had reported that debenture holders did not receive their dues including principal and interest payments for bonds that were sold nearly three years ago for Rs 50 crore. They are now meeting in mid-November to discuss the future course of action including a possible legal action against Jyoti Structures.

Many provident funds, educational institutions and senior citizens had invested in the securities. Some provident and gratuity funds included Scottish Church Collegiate School and St Pauls School Darjeeling, Ashok Leyland and state-owned MTNL.

A corporate lawyer said bond holders can seek the defence of Bankruptcy Code if the law is ready to be accessed. Without it, they can file cases citing provisions of normal recovery and cheating.

The Bankruptcy Code should help make the process much faster. In May , the Parliament passed the new law, which will be implemented gradually .

SBI, lead lender to Jyoti Structures, however, has exuded confidence of finding a buyer. Sources said the initial efforts to get Amin Group to acquire the firm were seen progressing slowly .

In a meeting on August 12, SBI had assured the bondholders through the custodian IDBI Trusteeship Services that the payments would be cleared by December. Later, IDBI Trustee sent a letter to bondholders stating key takeaways of the meeting.

“Now, SBI is acting as the lead for JLF in controlling and directing the cash flows as per scheme of revival envisaged for the firm by the joint lenders' forum (JLF),“ the letter said.