The government's construction arm NBCC on October 17 submitted before the Supreme Court its revised resolution plan to take over Jaypee Infratech's unfinished housing projects but the apex court refused to examine the proposal for now, saying that it will first decide on the eligibility of Jaypee Associates to bid for the embattled firm, sources said.
The next date of hearing is scheduled for October 22. The order is awaited.
NBCC submitted its revised plan before the apex court in a sealed envelope but it was returned to its counsel. Sources said that it may be taken up on October 22 after the court hears Jaypee's appeal.
Meanwhile, NBCC has received approval for the revised resolution plan for Jaypee Infratech by Department of Investment and Public Asset Management (DIPAM), sources told Moneycontrol.
Earlier, sources had told Moneycontrol that the government’s construction arm NBCC may consider reducing the upfront amount to lenders if it decides not to transfer Jaypee Infratech's unsold inventory to them in the revised proposal.
NBCC participated in the second round of bidding for the 16 stalled Jaypee Infratech projects. It had proposed infusion of Rs 200 crore as equity and transfer of 950 acres of land worth Rs 5,000 crore to the banks towards settling claims of Rs 23,723 crore. It had earlier promised to complete all the 24,000 units by July 2023.
Also Read: Here's all you need to know about the Jaypee Infratech case
Sources had said earlier that NBCC may propose to keep the entire inventory to itself and sell it in the open market to raise money to bridge the funding gap.
"NBCC was initially planning to give Rs 200 crore to lenders and taking Rs 1300 crore from them for the unsold inventory. Now if it decides not to hand over the unsold inventory to lenders, it may consider reducing the upfront amount," sources had said.
The issue of unsold inventory was a major deal breaker in the plan NBCC had submitted earlier. NBCC had earlier agreed to reduce the value of unsold inventories offered to lenders by 25 percent. It had proposed that it would reduce the value of unsold inventories offered to lenders to Rs 1,300 crore from earlier Rs 1,750 crore but banks were reluctant to acquire over 2000 unsold flats as proposed by NBCC in its previous offer and the plan did not go through.
In the revised proposal, it may have also perhaps proposed completing all the unfinished 16 projects within four years.
“If the project is 70 percent complete, it may be handed over within one year, those that are 40 to 70 percent complete may be deliverd within two years and those that are less than 40 percent complete may be delivered within three years,” sources had told Moneycontrol.
Also Read | Jaypee case: Supreme Court asks NBCC if it is willing to complete stalled projects
There are around 250 towers that are required to be completed and given possession across 16 projects. The status of each project is different. Some that are almost 90 percent complete may be given possession within three months while others that are just 40 percent complete may take longer. The company will also be required to complete all the facilities simultaneously. Therefore, four years is what it may require to complete all the projects,” sources had told Moneycontrol.
On September 5, NBCC had agreed to submit a revised proposal to take over the embattled company’s unfinished units.
A bench of justices AM Khanwilkar and Dinesh Maheshwari had directed NBCC to submit its proposal in a sealed envelope within three weeks. In the meantime interim arrangement would continue, it had said.
The bench said it will first look what NBCC has to offer and only then it may look into Jaypee group's fresh proposal.
During the hearing, the Centre had told the court that it would waive taxes, running into crores, due to Jaypee Infratech, if NBCC was to take over the embattled real-estate firm.
The SC had also directed all stakeholders - homebuyers, bankers, YEIDA, income tax officials, and FD holders to send their representations to NBCC to enable it to prepare the revised proposal.
“NBCC has received over 550 representations and the revised resolution plan has incorporated suggestions from all stakeholders,” sources said.
NBCC’s proposal submitted earlier had come with several conditions, including a demand to extinguish an estimated tax liability of Rs 33,000 crore over a period of 30 years arising out of the transfer of land parcels from Yamuna Expressway Industrial Development Authority to Jaypee Group and seeking permission from YEIDA for a business transfer. NBCC's bid was rejected due to these "rigid conditions" by the committee of creditors.
NBCC in its resolution plan submitted earlier had proposed creation of a separate company for the Yamuna Expressway to unlock revenue. This could not go through as the IBC norms did not allow for it then but amendments to IBC in August have allowed mergers and demergers.
The second deal breaker (in the NBCC resolution plan submitted earlier) was to do with the income tax demand of Rs 33,000 crore. The recent IBC amendment has made it clear that income tax demand and demand from authorities should be dealt like any other operational creditor. Post the amendments, there is now clarity that any statutory demand is an operational creditor. This problem too seems to have been resolved, experts had said.
With this two major deal-breakers in the resolution plan submitted by NBCC earlier have been dealt with by the recent amendments, sources had told Moneycontrol.
On August 22, the court had ordered status quo for a week on the insolvency proceeding after the Jaypee Group challenged an order of the National Company Law Appellate Tribunal (NCLAT) that allowed fresh bidding for Jaypee Infratech. The NCLAT had barred the parent company, Jaypee Associates, from bidding.
A group of homebuyers moved the apex court in 2017, saying around 23,000 people had booked flats and were paying installments, but their homes were not ready.
Vandana.ramnani@nw18.com
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