SELECTIVE SOLVENCY: Who Does the JAL–Adani Resolution Really Protect?

Examining the Systemic Bias in the JAL–Adani Resolution Plan.

~Sumon Mûkhöpadhuæy 

---

The Argument Against the JAL "Clean Slate"

What appears to be a routine insolvency resolution, upon closer examination, reveals a deeper structural inconsistency.

The approval of the Adani resolution plan for Jaiprakash Associates Limited (JAL) is not merely a legal outcome; it is a manifestation of regulatory arbitrage. While the law claims to function as an objective mechanism, the contrasting treatment of Vodafone Idea (Vi) suggests that "too big to fail" is selectively applied—often aligned with strategic priorities—leaving retail investors in infrastructure to absorb the full extent of loss.

Core Thesis: The IBC "Waterfall Mechanism" is being used as a legal shield to facilitate the transfer of massive physical assets (land, plants, infrastructure) to large conglomerates while effectively eliminating the equity of 6.45 lakh public shareholders.

The "Strategic Necessity" Double Standard

The primary defense for supporting Vodafone Idea was the need to prevent a telecom duopoly. However, this reasoning appears inconsistent when compared with the economic consequences faced by JAL shareholders.

• Vi: Granted a moratorium on substantial AGR dues along with a government-backed debt-to-equity conversion.
• JAL: Pushed into NCLT despite attempts by management to monetize assets (such as the cement division) to settle liabilities outside the insolvency framework.

The Flaw in the "Waterfall" Logic

Feature	The "Strict" JAL Path (Adani)	The "Flexible" Vi Path (Govt)
Shareholder Value	Wiped to Zero (₹0)	Protected (Diluted but Tradable)
Management	Ousted immediately	Allowed to restructure and remain
Public Impact	6.45 lakh investors lose everything	Investors retained a stake in recovery

Capitalizing on Distress

The controversial nature of such acquisitions lies in the Clean Slate Rule. By acquiring JAL through the NCLT, the buyer effectively gains control of nearly 4,000 acres of prime real estate and significant industrial capacity at distressed valuations.

At the same time, the framework permits the elimination of the very stakeholders who financed these assets over decades—public shareholders.

Lack of Transparency in the Bidding Process

Rival bidders such as Vedanta have raised concerns regarding the transparency of the Committee of Creditors (CoC). A resolution plan offering "NIL" value to shareholders suggests that immediate recovery for lenders may have been prioritized over a more balanced restructuring approach.

If value can be created for acquirers and lenders, the question remains—why must equity always be reduced to zero?

When equity is erased, the question is not legality—but fairness.

---

Note: This analysis is intended for shareholder awareness and policy review discussions.