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Jaypee Infratech case: Resolution process may get delayed, say sources

NBCC and Suraksha Group sweeten bids.

The process of finding the buyer for Jaypee Infratech may not be completed by the first week of May and the resolution process may get extended, sources said.

The Interim Resolution Professional (IRP) Anuj Jain may approach the Supreme Court asking for an extension of the corporate insolvency resolution process (CIRP), sources told Moneycontrol.

Moneycontrol’s query to Jain on the issue was not answered.

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 7.

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.

NBCC has revised its bid to offer up to 1,903 acre land parcels, mainly in Noida and Greater Noida in Uttar Pradesh. At the CoC meeting held on April 29, there were a few demands from homebuyers. NBCC has agreed to reduce the delay interest from 18 percent to 15 percent; it has also agreed to provide interest at the rate of 15 percent to refund seekers if the refund is delayed; it has also agreed to extend the 90-day window for payment to 120 days, sources told Moneycontrol.

The government’s construction arm is not planning to raise a loan for construction but will be relying on the Rs 2,000 crore from the Yamuna Expressway; Rs 3,000 crore from homebuyers and around Rs 1,500 crore from internal accruals, interest, equity contribution and unsold inventory, they claimed.

Suraksha, in its revised plan dated April 28, has proposed that land worth Rs 400 crore will be kept reserved for delay penalty. This may work out to be around Rs 2 lakh per flat equivalent to about Rs 3 or 4 per sq ft up to September 2017 before the beginning of the CIRP, the sources said.

All flats have to be handed over in 48 months, which means as many as 60 percent to be handed over in the first two years, they said.

It has also proposed the formation of project-wise monitoring committees with representatives of homebuyers to ensure quality and project-wise escrow account as per provisions of RERA, they said.

Homebuyers of projects cancelled can either take refund which would be paid in two interest-free installments in two years or can opt for flats in existing projects with 20 percent discount equivalent to the amount paid so far.

It has also said that buyers who had opted for cancellations in the past could request for restoration of their bookings within three months.

However, issues pertaining to the treatment of dissenting financial creditors and YEIDA remain unresolved.

Earlier this month, NBCC and Mumbai-based Suraksha group submitted their revised bids to acquire Jaypee Infratech through an insolvency process, as per the direction of the Supreme Court. In their bids, NBCC had offered 1,526-acre land and Suraksha group around 2,040 acres to lenders.

Both the firms had carried out some changes in their revised plans following the apex court order to return Rs 750 crore with accrued interest to Jaiprakash Associates (JAL) after reconciliation of accounts between JAL and JIL.

In the last 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.

This is the fourth round of the corporate insolvency resolution process.

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 improved 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.

Vandana Ramnani
Vandana Ramnani
first published: Apr 30, 2021 02:28 pm