SC directs status quo on Jayaswal Neco resolution process

NEW DELHI: The Supreme Court ordered status quo to be maintained in the insolvency resolution proceedings against Jayaswal NecoNSE 4.88 %, acting on a plea by the company that the process could not have been initiated when a majority of the lenders had agreed to a debt restructuring plan under a Reserve Bank of India directive. 

Status quo will be maintained, a bench led by Justice Ranjan Gogoi directed on Monday. The bench issued notices to all parties on the company’s plea. The company case was argued by senior advocate Harish Salve who was assisted by lawyer Mahesh Agrawal. 

Jayaswal Neco, a producer of iron and steel castings, owes upwards of Rs. 5,000 crore to a group of lenders. The lenders had designated over 60% of the loans as non- performing assets as of March 31, 2016. 

The company had first moved the Bombay High Court against the initiation of the insolvency resolution proceedings, but had been turned away. It appealed against the decision in the top court. 

Jayaswal Neco said the RBI’s master circular allowed the company, which was hit by cancellation of some coal mines and the steel sector crisis, to carry out debt