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Jaypee case: Lenders seek clarifications from NBCC on its resolution plan

The committee of creditors will reconvene on May 14 to take a final call on the revised bid by NBCC, sources said.

Vandana Ramnani @vandanaramnani1
 
 
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Lenders of Jaypee Infratech on May 9 sought clarifications from NBCC regarding the 'conditions' imposed by it in the proposed resolution plan and how it would fund the takeover of the embattled company, sources said.

Sources said NBCC has put several conditions for the implementation of its plan, including a demand to extinguish an estimated income-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 (YEIDA) to the Jaypee Group.

It was decided at the committee of creditors (CoC) meeting that lenders would send written queries to NBCC by May 10 and that it would respond by May 13.

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Sources told Moneycontrol that NBCC officials answered all the queries verbally at the meeting .

The committee of creditors will reconvene on May 14 to take a final call on the revised bid by NBCC, sources said.

Clarifications have been sought following Jaypee Infratech's Interim Resolution Professional (IRP) Anuj Jain bringing to the notice of the lenders that NBCC's bid was conditional and non-binding, reports said.

Jain had reportedly written to the CoC that NBCC's revised bid is conditional as the state-owned firm has stated that the plan will not be binding on it unless key relief measures such as extinguishing of income tax liability and a dispensation from seeking consent of YEIDA for any business transfer is granted, sources had said.

The IRP had  pointed out that the insolvency process approved by the CoC in December last year provided that the resolution plans from potential bidders should be binding and non-conditional.

NBCC has proposed infusion of Rs 200 crore equity capital, transfer of 950 acres of land worth Rs 5,000 crore to banks and completing construction of flats by July 2023 to settle an outstanding claim of Rs 23,723 crore of financial creditors.

Thursday’s meeting was called after creditors on May 3 rejected the bid of Mumbai-based Suraksha Realty group for the second time. It was the only contender after NBCC's offer was rejected in absence of approvals from the government departments. NBCC received the approvals from authorities on April 29.

Under the insolvency proceedings, 41.85 per cent of the total votes of the committee of creditors (CoC) was against the proposal, while 23.47 per cent was in favour. Most of those voting in favour of Suraksha were homebuyers, who hold about 60 per cent of the voting rights in the CoCAs much as 66 per cent votes is required for acceptance of a proposal.

As many as 22.46 percent (8019) homebuyers voted for Suraksha, 2.19 percent dissented (860) and 34.62 percent abstained (14,632) from e-voting process, which started on April 30 and concluded on May 3.

Confusion over whether NBCC’s bid would be put to vote or not after it received all requisite approvals was perhaps the main reason why Suraksha Realty’s bid for the embattled company Jaypee Infratech was unable to garner sufficient votes from homebuyers who abstained in large numbers, besides of course the fact that its offer was low on upfront cash payment, experts said.

Meanwhile, the Allahabad bench of National Company Law Tribunal on May 6, which was the date on which the 270-day deadline for insolvency proceedings ended, directed that the corporate insolvency resolution process in the Jaypee Infra matter could continue until May 21, the next date of hearing.

Embattled Jaypee Infratech's lead lender IDBI on April 29 had approached the NCLT seeking extension of insolvency proceedings beyond the 270-day deadline as the process is still underway to find a buyer for the Jaypee group's realty firm.

IDBI had also requested the tribunal to deduct the litigation period at several judicial forums, which includes the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court. IDBI's plea is supported by the representative of the home buyers, who are financial creditors under IBC.

On January 28 this year, the NCLT had extended the period of the CIRP by another 90 days as 180 days mandated under the Insolvency and Bankruptcy Code (IBC) were to come to an end on February 5, 2019.

Under the IBC, a resolution process has to be completed under 180 days with a further extension of 90 days to 270 days. If the company fails to complete the CIRP within the mandated 270 days, then the company goes for liquidation.

Adani Group has also shown interest in acquiring Jaypee Infratech and completing over 20,000 delayed flats in Noida.

Jaypee Group's promoters too have made a formal bid to the IRP, conducted meetings with homebuyers, sent them direct emails and also established a call centre in the last few days.

As many as 22,000 homebuyers are stuck because of significant delay in delivery of flats by Jaypee group's debt-ridden firm Jaypee Infratech, which is undergoing insolvency proceedings.

In 2017, the National Company Law Tribunal (NCLT) admitted the application by an IDBI Bank-led consortium seeking resolution of Jaypee Infratech. In the first round of insolvency proceedings, the Rs 7,350 crore bid of Lakshdeep, part of Suraksha group, was rejected by lenders as it was found to be substantially lower than the company's net worth and assets.

In October 2018, the IRP started a fresh initiative to revive Jaypee Infratech on NCLT's direction.

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First Published on May 9, 2019 07:39 pm
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