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Jaypee Infratech case: NCLAT directs lenders to submit terms and conditions for fresh bidders

This may pave the way for fresh bids for Jaypee Infratech, including one from Adani Group that had earlier made an unsolicited and non-binding bid to acquire the embattled firm

Vandana Ramnani @vandanaramnani1

Making it clear that the resolution applicant will have to ensure that the interests of Jaypee homebuyers are protected at all costs, the National Company Law Appellate Tribunal (NCLAT) July 17 directed banks to submit the terms and conditions for fresh bidders in the resolution process of the embattled firm.

"Counsel appearing for lenders are allowed to file new terms and conditions in case fresh bidding takes place," the bench said.

This may pave the way for fresh bids for Jaypee Infratech, including one from business conglomerate Adani Group that had earlier made an unsolicited and non-binding bid to acquire Jaypee Infratech and had said that it is ready to infuse up to Rs 1,700 crore to expedite the construction of stuck housing projects of the debt-laden realty firm and deliver flats to homebuyers.

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The NCLAT bench asked the Adani Group to improve its bid and agree to the terms and conditions set by the appellate tribunal if it wanted to be part of the process, sources said.

The terms and conditions should be submitted by the committee of creditors by Friday, the bench said, adding it would pass further orders on July 22.

A two-member bench headed by Chairman Justice SJ Mukhopadhaya directed the lead bank IDBI to file an affidavit listing the fresh terms and condition if a fresh round of bidding was to be conducted.

The bench made it clear that there should be no changes in the terms of the builder-buyer agreements that were signed with homebuyers earlier. All allottees should be given units according to the builder-buyer agreements. 'The terms of the contract cannot be changed,' the bench said.

If allottees are not present then the committee of creditors (CoC) has to decide how it has to be adjusted. The land attached to the building and with common area amenities would remain with the allottees, it said.

In the second round of bidding, the CoC had first rejected the resolution plan of Suraksha Realty and then voted against state-owned NBCC's offer. In the voting that took place on NBCC's bid, 34.75 per cent of home buyers voted in favour, 1.44 per cent voted against, whereas 23.8 per cent did not vote.

All the 13 banks, which constitute 40.75 per cent of CoC, voted against the bid by the state-run firm to acquire Jaypee Infratech. Homebuyers have nearly 60 per cent voting rights in the CoC.

NCLAT had earlier this month directed representatives of banks, allottees and other stakeholders to appear before it on July 17 to consider how the NBCC resolution plan could be amended for the benefit of homebuyers.

The bench had said NBCC is a government company and one can rely on it, adding that it knows "the pain of allottees" and wants to do justice to them.

NBCC had in its revised bid agreed to reduce the value of unsold inventories offered to lenders by around 25 percent. The public sector firm has proposed that it would reduce the value of unsold inventories offered to lenders to Rs 1,300 crore from earlier Rs 1,750 crore.

Banks had been reluctant to acquire over 2,000 unsold flats as proposed by NBCC in its revised offer.

However, NBCC did not dilute other conditions in its offer, including exemption from future tax liability, mentioned in its bid.  In its revised offer, NBCC had 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.

But it had 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 Jaypee Group and seeking permission from YEIDA for any business transfer.

On this bid, lenders had reservations on certain relief and concessions sought by NBCC and sought clarifications from the firm. Clarifications from NBCC were sought in the wake of IRP Anuj Jain flagging to the lenders that the state-owned firm's bid was conditional and non-binding because of the two conditions.

As many as 13 banks and over 23,000 homebuyers have voting rights in the committee of creditors (CoC). Buyers have nearly 60 percent votes. For the bid to be approved, 66 percent voters should be in favour of the deal.

Earlier in May, creditors, including banks and homebuyers, rejected a bid by Mumbai-based Suraksha Realty through a voting process, following which the CoC decided to consider NBCC's offer.

Jaypee Infratech went into insolvency process in 2017 after the NCLT admitted an application by an IDBI Bank-led consortium seeking resolution of the realty firm. In the first round of insolvency proceedings, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. Later in October 2018, the Interim Resolution Professional (IRP) started the second round of bidding process to revive Jaypee Infratech on the direction of NCLT.

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First Published on Jul 17, 2019 09:29 pm
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