GAIL, India's largest gas company, has invested Rs 2,100 crore in JBF Petrochemicals Ltd, an insolvent private-sector chemical company that it acquired in bankruptcy proceedings. In March, the firm received bankruptcy court approval to take over JBF.

GAIL (India) Ltd stated in a stock exchange filing that it has "infused Rs 2,101 crore (equity - Rs 625 crore and debt - Rs 1,476 crore)" in the committed bankruptcy resolution plan.

"As a result, JBF has become a wholly-owned subsidiary of GAIL with effect from June 1, 2023," the company stated.

GAIL outbid a consortium of Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC) in an IDBI Bank-run insolvency process to recover Rs 5,628 crore in financial and operational creditors.

JBF Petrochemicals was founded in 2008 with the goal of establishing a 1.25 million tonne per year purified terephthalic acid plant in the Mangalore Special Economic Zone.

IDBI and other banks lent JBF money to build the PTA plant for USD 603.81 million, with BP providing technology and OMPL providing 50,000 tonnes of paraxylene feedstock per month.

The plant, which is a backward integration project for JBF Industries' polyester plants, was commissioned in 2017 but ceased operations the following year after the company defaulted on its loans.

Due to the default, the lenders dragged it into corporate insolvency and bankruptcy (IBC).

Lenders and operational creditors, including employees, claimed Rs 7,918 crore in debt, but only Rs 5,628 crore in debt was admitted, including Rs 712 crore owed to operational creditors.