Homebuyers not enthused by Jaypee Group promoter's offer of completing delayed projects

"We have submitted a proposal under Sec 12A of the IBC procedure in April. To begin with, we will set aside Rs 1,500 crore in an escrow account, which will be monitored by a committee. The entire amount will be used for construction and completion of the houses. The monitoring committee would constitute a  retired judge of a Supreme Court, a technical member and I will be the convenor. It’s been 18 months since the resolution process is on and there is still no solution. Our Chairman has apologised for the delay. We need one more chance. The final decision ultimately lies with the NCLT. Today we have made a presentation to the buyers. We are committed to delivering their houses.

"The houses in Wishtown will be delivered within three years and the remaining will handed over within the next one year. All houses will be delivered within four years. A 100-acre land parcel worth Rs 500 crore has been set aside. Besides we also have unsold inventory and payments due from homebuyers that would be utilized for completion," Kumar said.

Over 600 buyers attended the meeting. Some homebuyers decided to boycott the meeting to protest against the almost decade long delay in possession of their flats. They even demanded that banks should be asked to suspend monthly EMIs for the time being to provide some relief.

As many as 22,000 homebuyers are stuck  due to delay in delivery of flats by Jaypee Group's debt-ridden firm Jaypee Infratech.

Some buyers who attended the meeting on Friday, questioned the timing of organising such a session.

"Under the Insolvency and Bankruptcy Code, for any settlement plan to come through, approval of 90 percent financial creditors is required of which 59 percent are homebuyers. This means that even if banks support is 100 percent, the promoter still requires the support of homebuyers. For a resolution plan too approval of 66 percent financial creditors is required. This meeting was a means to garner support from homebuyers," said homebuyers.

"The promoter did not have any answers to our questions. We asked him  about the sudden sympathy and compassion for the homebuyers and asked him to come out with clean hands as the compensation offered as per the allotment letter is one-sided - barely Rs 5 per sq ft - which works out to be around 1 percent to 1.5 percent of the total amount paid by us," said a buyer.

Homebuyers were scathing in their assessment of the new offer made by the promoter and raised doubts over his ability to walk the talk.

"If he actually had moral responsibility, he should have come up with commercial compensation for buyers. We also asked him about the Rs 6,000 crore required to complete the project. He did not have any answers. He only said that Rs 1,500 crore would be raised from banks. He did not have anything of his own to offer. There was no takeaway from the meeting. At one point, he even brought his father on the stage, who asked us to have faith and promised that our homes would be completed," homebuyers said.

Buyers also said that they still had hope in the NBCC bid. State-owned NBCC Ltd is expected to submit its revised bid by April 25 for acquiring Jaypee Infratech and complete the housing projects. NBCC and Suraksha Group are in race to acquire bankruptcy-bound realty firm Jaypee Infratech.

Some buyers fear that May 6 is the deadline for expiry of the resolution process and that if a resolution is not worked out by the deadline, the company may go into liquidation as it is unlikely to be granted more time for the resolution process.

But legal sources said that these fears are unfounded as a case has already been filed by buyers pertaining to the modus operandi  for calculating homebuyers' vote share at a CoC meeting is still pending in NCLT. The last order has clearly stated that period spent on the litigation should be excluded from the corporate insolvency resolution process (CIRP) deadline, sources said.

In its earlier resolution plan, NBCC offered 1,400 acre land worth Rs 6,000 crore as well as Yamuna Expressway to lenders.

It had proposed that banks should raise about Rs 2,000 crore against the expressway and provide half of the amount (Rs 1,000 crore) to the state-owned company, which would utilise the fund as an upfront payment.

NBCC had offered to fund the gap of about Rs 1,500 crore between estimated construction cost and receivables from customers.

In contrast, Suraksha Group made an offer of about Rs 20 crore as an upfront payment and land worth Rs 5,000 crore, sources had said. The Mumbai-based group promised to complete the pending projects in three years.

The National Company Law Tribunal (NCLT) in 2017 had admitted the application of a consortium led by IDBI Bank seeking resolution of Jaypee Infratech, and appointed Anuj Jain as the insolvency resolution professional (IRP) to manage the company's business and invite bids from investors.

In the first attempt under the insolvency process, lenders had rejected the Rs 7,350 crore bid of Lakshdeep, part of Suraksha Group, as they found it to be substantially lower than the company's net worth and assets.

Therefore, the IRP in October 2018 started a fresh initiative to revive Jaypee Infratech.

The realty firm has an outstanding debt of nearly Rs 9,800 crore, of which Rs 4,334 crore pertains to IDBI Bank. Other lenders are IIFCL, LIC, SBI, Corporation Bank, Syndicate Bank, Bank Of Maharashtra, ICICI Bank, Union Bank, IFCI, J&K Bank, Axis Bank and Srei Equipment Finance.

Jaypee Infratech is developing about 32,000 flats, of which it has delivered 9,500 units. JAL had deposited Rs 750 crore in the registry of the Supreme Court for refund to buyers. However, this amount was transferred to the NCLT as per an order of the apex court.

vandana.ramnani@nw18.com