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Last Updated : Oct 22, 2018 06:28 PM IST | Source: Moneycontrol.com

Financial creditors of Jaypee Infratech vote for appointment of new resolution professional

Homebuyers, FD holders and financial institutions have voted online on appointment of Deloitte Touche Tohmatsu India LLP to assist the RP, buyers' objections to related party transactions between JIL and JAL, proposed fee for the resolution professional among other issues

Vandana Ramnani @vandanaramnani1

Financial creditors of the embattled company Jaypee Infratech (JIL) including home buyers, fixed deposit holders and financial institutions have voted online on six issues, including the appointment of a new resolution professional (RP).

These stakeholders have also voted for appointment of Deloitte Touche Tohmatsu India LLP to assist the RP, buyers' objections to related party transactions between JIL and Jaypee Associates (JAL), a lower fee for the RP, acceptance of resignation of seven independent directors and approval of Form G for invitation for expression of interest, sources said.

CoC members had, at the second meeting held on October 17, unanimously decided to conduct the voting through electronic means. The meeting was presided by insolvency resolution professional Anuj Jain. The IRP had apprised the CoC members that the voting portal will be open from 5 PM on October 19 until 12 PM on October 22.

The results of voting that ended on October 22 will be known after 48 hours, sources said

The CoC was reconstituted on October 11 following the IBBI circular dated September 14 that made it clear that only those financial creditors be included as part of the CoC who have submitted their claims with the chairperson. The total number of homebuyers who were part of the CoC is  22,482 with the total value of claim at Rs 13,660 crore and voting share of 58.2 percent, 557 are FD holders with a total claim value of Rs 19 crore. As many as 13 banks are part of the CoC with a total claim value of Rs 9,783 crore and percentage voting share of 41.7 percent, sources said.

The first agenda put to vote was to do with the appointment of Vijaykumar V Iyer as a resolution professional to replace the Interim Resolution Professional Anuj Jain for the Corporate Insolvency Resolution Process. At the first CoC meeting held last month, homebuyers had rejected the reappointment of Anuj Jain as resolution professional, sources said.

The second item that came up for voting was to do with the appointment of Deloitte Touche Tohmatsu India LLP to assist the resolution professional in connection with the corporate insolvency resolution process of the company.

The proposed fee of the resolution professional (who will be assisted by DTTILLP) at Rs 48.50 lakh per month, plus OPE, and GST, as a part of the insolvency resolution process costs to be paid out of the cash flows of the corporate debtor was also put to vote. At the CoC meeting last week, Kuldeep Verma, authorised representative of homebuyers had submitted that some home buyers had requested for re-negotiating the RP fee, they said.

Homebuyers objections to related party transactions between JIL and JAL were also put to vote. At the meeting held on Wednesday, the authorised representative of home buyers submitted that he had received concerns from homebuyers on profit money being paid to JAL as a contractor. The IRP had clarified that although the master contract is with JAL, the payment for site works is made directly in the account of JAL’s sub-contractors and only the indirect costs such as reimbursement of manpower/ staff, GST/other tax or other costs pertaining to JIL works had been paid to JAL.

They also voted for the approval of Form G (invitation for expression of interest). The authorised representative of home buyers had sought clarification if the Form G shall be published in the overseas newspaper as well. IRP clarified that as per mandatory requirement, Form G shall be published in one English and one regional language newspaper in India and the same shall be uploaded on the IBBI website.

Other issues that were discussed at the meeting last week included homebuyers call for a forensic audit into the affairs of JIL and clarification on the role of IRP in fixing RERA timelines. The chairperson clarified the RERA timelines have been fixed by the authority before the start of CIRP process and IRP has no role in fixing the revised timelines of delivery of flats, sources said.

The issue of Rs 750 crore plus interest penalty available with the National Company Law Tribunal Allahabad following the August 9 Supreme Court order was also discussed. Nine associations of homebuyers have filed an application with the NCLT seeking direction to release the amount for construction of incomplete projects. The next date of hearing is November 27.

In August this year, the apex court had said the insolvency proceedings against Jaypee Infratech will be dealt with by the Allahabad bench of the National Company Law Tribunal (NCLT). The court had also ordered the reconstitution of the company’s Committee of Creditors in light of recent amendments to the Insolvency and Bankruptcy Code (IBC) that permit homebuyers to be a part of the resolution process. The Rs 750 crore that Jaiprakash Associates had deposited with the Supreme Court’s registry were also transferred to the NCLT.

Jaypee Infratech homebuyers may have a 62 percent say in the committee of creditors, but this voting share does not guarantee that the resolution plan will sail through, homebuyers had said in a letter written to the Insolvency and Bankruptcy Board of India (IBBI), Chairperson MS Sahoo. Jaypee Wishtown homebuyers claimed that the present voting rules were skewed and bound to result in liquidation by design. They asked Sahoo to look into the issue and resolve the alleged bias rules.

On October 4, allaying fears of more than 25,000 homebuyers, Sahoo had told IANS all voting-related obstacles in JIL's resolution have been removed. “We have addressed the voting issue… it appears to me that not all 25,000 people have joined the Committee of Creditors (CoC); only 10,000 have joined. You have to count voting for 10,000 only. The Electoral College is 10,000.”

Though the amended Insolvency and Bankruptcy Code (IBC) treats homebuyers as financial creditors and thus a part of the CoC that takes all crucial decisions, the law mandated that those who abstained from voting will be treated as a negative vote.

The NCLT had on August 10 last year, admitted IDBI Bank’s plea to initiate insolvency proceedings against the JIL for defaulting on Rs 526-crore loan. While admitting the plea of IDBI Bank, the NCLT had appointed Anuj Jain as IRP to manage the company’s business.

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First Published on Oct 22, 2018 06:28 pm
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