Jaypee Infratech case: NBCC may move Supreme Court against IRP's decision to reject its bid

The CoC on May 20 decided to start voting process on Suraksha group's bid from next week, while rejecting the resolution plan of NBCC terming it as non-compliant, sources had told Moneycontrol.

In a regulatory filing on May 21, Jaypee Infratech said that “we wish to inform you that the CoC has in its meeting held on 20th May, 2021 decided to put to vote the final Resolution Plan dated 18 May 2021 of Suraksha Realty Limited along with Lakshdeep Investments and Finance Private Limited (“Suraksha”) and other items. The e-voting on items shall commence on 24th May, 2021 (12.00 P.M.) and shall close on 27th May, 2021 (5:00 P.M.).”

On May 20, the committee had decided not to put NBCC's bid on voting as it found the NBCC’s offer non-compliant to provisions of insolvency law related to the treatment of assenting and dissenting financial creditors, sources had said.

The Mumbai-based firm Suraksha’s Resolution Plan submitted with changes to the interim resolution professional (IRP) Anuj Jain on May 18 was found to be compliant with the provisions of the IBC and corporate insolvency resolution process regulations as well as the Supreme Court directions on the Jaypee matter.

The 21st meeting of the CoC was held on May 20. This is the fourth round of the bidding process.

The government’s construction arm NBCC and Mumbai-based Suraksha Group were the two entities that were in the fray to acquire the embattled Jaypee Infratech Ltd and complete the 20,000 homes for which buyers have been waiting for almost a decade.

The Suraksha Group has proposed to give 2,651 acres to lenders to settle the Rs 7,116 crore debt. It has earmarked 1,486 acres to dissenting lenders out of the total land parcels offered in the proposal.

Suraksha Group intends to keep Yamuna Expressway with itself. It has offered to complete pending works of around 20,000 housing units in 42 months.

It has proposed a line of credit of Rs 3,000 crore as working capital for construction of projects. It has given an undertaking that any shortfall to the dissenting creditors will be met by the company by way of more funds or assets.

It has planned a Rs 125 crore worth fund infusion into Jaypee Infratech to start work.

It will also have access to Rs 300 crore which Jaiprakash Associates owes.

The plan also talks of keeping aside land parcels worth Rs 400 crore in a trust which will be used to pay dues to homebuyers if there is a delay.

For delays that extend more than a year, the firm will pay a penalty of Rs 5 per sq ft per month. For those seeking a refund, it will pay Rs 65 crore in two installments.

NBCC on the other hand had offered 1,903 acres of land to banks and financial institutions to settle Rs 9,782 crore debt. It had also offered 377 acres of the 1,903 acres of land for dissenting creditors.

NBCC and Suraksha Group had earlier submitted their revised bids on May 10.

NBCC had also incorporated some of the suggestions made by homebuyers on the resolution plan submitted by it on April 28, 2021. One of them is tower wise schedule of delivery. They have shortened the delivery timelines and would be delivering 70 percent (around 13,000) of the units within 30 months. All units, including plots, would be delivered within 42 months.

NBCC had proposed to set up a single-window redressal system to help resolve grievances of homebuyers. The single-window redressal system would be put in place after the transfer date.

It had also considered homebuyers’ representative in the steering committee, sources said.

Earlier, the Interim Resolution Professional (IRP) Anuj Jain had approached the Supreme Court asking for an extension of the corporate insolvency resolution process (CIRP) by a month.

In an application filed before the Supreme Court, the IRP has said that the completion of the resolution process within 45 days has become unfeasible due to the current surge in COVID-19 pandemic and restrictions imposed by different states, sources said.

The IRP had convened the 17th meeting of the CoC on April 12, 2021, to discuss the resolution plans submitted by NBCC and Suraksha. Both NBCC and Suraksha had submitted their revised resolution plans on April 28. In the 18th meeting of the CoC held on April 17, lenders had asked NBCC and Suraksha group to improve their bid and offer more land parcels under the land-debt swap deal. They had also asked the bidders to specify the treatment of dissenting financial creditors.

The 19th meeting of the CoC was convened on April 29, 2021 and the 20th meeting was held on May 15, 2021.

Suraksha Group had held a meeting with homebuyers on May 2, 2021, and NBCC held one on May 7, 2021, for discussions/suggestions on the resolution plan of Jaypee Infratech.

On March 24, the Supreme Court had directed the interim resolution professional of Jaypee Infratech to invite modified or fresh resolution plans only from Suraksha Realty and state-run NBCC and complete insolvency proceedings in 45 days. The timeline ends on May 8.

The apex court had also said that Rs 750 crore deposited by Jaypee Associates would not go to Jaypee Infratech and that NBCC would not be allowed to utilise it for construction.

It had said, “However, the final treatment of the said amount of Rs 750 crore with accrued interest shall be determined by NCLT after the reconciliation of accounts between JAL and JIL and in terms of the directions contained in this judgment”.

Financial creditors of debt-ridden Jaypee Infratech, including banks and homebuyers, met on April 29 and held discussions on the revised resolution plans submitted by the two entities. The case involves more than 20,000 homebuyers who have been anxiously waiting for the completion of their homes for over a decade.

In November 2019, the top court had directed the completion of Jaypee Infratech's insolvency process within 90 days and the revised resolution plan to be invited only from the NBCC and Suraksha Realty.

The December 2019 round of voting was the third round of the bidding process to find a buyer for Jaypee Infratech, which went into the Corporate Insolvency Resolution Process (CIRP) in August 2017.

NBCC had then proposed to complete over 20,000 pending flats in housing projects launched by Jaypee Infratech in Noida and Greater Noida (Uttar Pradesh). Homebuyers' claims amounting to Rs 13,364 crore and lenders' claims worth Rs 9,783 crore were admitted.

In its bid in December 2019, NBCC had offered 1,526 acres of land to lenders under a land-debt swap deal. On Yamuna Expressway, NBCC has proposed to transfer the road asset to lenders but before that, it would take a loan of around Rs 2,500 crore against toll revenue to fund construction spend.

More than 10,000 homebuyers and major lenders of Jaypee Infratech, including IDBI Bank and State Bank of India, had voted in favour of the resolution plan submitted by the government's construction arm NBCC to acquire the embattled real estate firm. The CoC comprising 13 banks and around 21,000 homebuyers, approved the resolution plan of NBCC with a 97.36 percent vote in favour in the third round of the bidding process.

In the same round, Mumbai-based Suraksha Realty had upped its bid to acquire Jaypee Infratech by offering more land and upfront cash to lenders. It had increased its upfront payment to lenders to Rs 190 crore from Rs 175 crore, while size of the land-debt swap improved to 2,275 acres from 2,220 acres in its final bid submitted on December 3.