Jaypee Group taps global credit funds for Rs 10k crore to bail out flagship firm

Financially beleaguered Jaypee Group has tapped global credit funds like Varde Partners, Ares, Cerberus and Hillhouse to raise ₹10,000 crore in high-cost financing to rescue its flagship company Jaiprakash Associates (JAL) from bankruptcy, said people in the know. Jaypee Group is led by executive chairman and chief executive Manoj Gaur.

JAL was admitted for insolvency proceedings on June 3 by the National Company Law Tribunal (NCLT) following a petition filed by lenders led by ICICI Bank.

However, JAL's disputes with land authorities could pose a hurdle in negotiations with the credit funds, the people said. "Principal repayments on the company's loans are due in 2037. Their ask is for funds to refinance borrowings. Further, they intend to undertake asset sales to pare debt," said a person aware of the talks between JAL and the credit funds.


The company owns real estate on the Noida-Greater Noida expressway, cement plants, residential buildings, hotels and a hospital apart from a Formula One racetrack.

Jaypee Group, Varde, Cerberus Capital and Hillhouse did not respond to ET's queries. Ares declined to comment.

"This is an asset heavy company, so there is value in it. This is unlike any other construction company in that sense," said a senior executive at a bank that has lent money to JAL. A total of 28 banks have filed claims worth ₹48,000 crore against the company, shows data from Insolvency and Bankruptcy Board of India's website.

There are provisions within the Insolvency and Bankruptcy Code (IBC) for companies to be pulled out of the legal process even after the start of insolvency proceedings, said legal experts.

"Under Section 12A of the IBC, insolvency proceedings can be withdrawn by order of NCLT after obtaining the approval of 90% of voting share of the committee of creditors", said NPS Chawla, joint managing partner, Aekom Legal.

He said if the committee of creditors was not formed, the need for 90% of creditor approval can also be waived off.

"If the committee of creditors is not yet formed, then the corporate insolvency resolution process can be withdrawn by the original applicant by filing form FA through the interim resolution professional and obtaining an order from NCLT," said Chawla.

JAL had proposed a one-time settlement offer to banks last November. The creditors, however, declined the proposal as the company did not have funds at its disposal at the time. As part of the settlement offer, JAL had indicated that it would carve out its unsustainable debt into a special purpose vehicle, which would be collateralised by the company's land bank.