A contractor has filed the first formal challenge against Adani’s ₹14,543-crore resolution plan for Jaiprakash Associates, with the National Company Law Appellate Tribunal scheduled to hear the matter on 20 March. Velocity Enterprises contests the approval granted by the Mumbai bench of the National Company Law Tribunal, raising questions about creditor treatment under the resolution framework.
The challenge follows a pattern where operational creditors frequently dispute resolution plans after approval, arguing their claims received insufficient consideration during the insolvency process. Velocity Enterprises’ objections center on the treatment of contractor dues within the broader creditor classification scheme.
Jaiprakash Associates entered insolvency proceedings with liabilities exceeding ₹80,000 crore across multiple group companies. The Adani resolution plan offered varying recovery rates to different creditor classes, with secured financial creditors typically receiving higher percentages than operational creditors like contractors and suppliers.
Resolution plans under the Insolvency and Bankruptcy Code require approval from creditors holding at least 66% of voting share by value. This threshold calculation excludes operational creditors from the voting process, limiting their influence to objections filed during the mandatory consultation period or appeals after tribunal approval.
The NCLAT hearing will examine whether proper procedure was followed in evaluating and responding to operational creditor objections. Courts have previously remanded resolution plans where tribunals failed to adequately address such concerns or provide reasoned decisions on creditor treatment disparities.
Adani’s acquisition strategy has involved multiple stressed asset purchases through the insolvency route. The group’s approach typically involves offering recovery rates that satisfy the financial creditor majority while operational creditors receive minimal amounts. This structure reflects the IBC’s prioritization of secured debt recovery over trade creditor claims.
The timing of Velocity Enterprises’ challenge suggests the contractor may have discovered additional grounds for objection after reviewing the detailed resolution plan implementation. Appeals filed within 30 days of NCLT approval often cite procedural deficiencies or material non-disclosure that became apparent only after the tribunal’s order.
Corporate insolvency data shows operational creditor challenges succeed in approximately 15-20% of cases that reach the NCLAT [VERIFY]. Success rates improve when appellants can demonstrate clear procedural violations or evidence that their objections were not properly considered by the original tribunal.
The Jaiprakash case involves multiple regulatory clearances beyond insolvency approval. Environmental clearances, mining permits, and state government approvals remain pending for several group companies, creating execution risk for the resolution plan regardless of the NCLAT outcome.
Market observers note that delayed or contested resolution implementations often trigger penalty clauses built into approved plans. These provisions typically allow resolution applicants to reduce their committed investment amounts or extend payment timelines when external factors prevent smooth execution.
My Boardroom Takeaway: Independent directors evaluating stressed asset acquisitions should insist on comprehensive operational creditor mapping during due diligence. The board may wish to establish clear protocols for addressing post-approval challenges, including contingency funding for potential settlement negotiations. A prudent approach would include regular monitoring of appellate proceedings that could delay asset transfer or trigger plan modification requirements.