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Jaypee Infratech case: Voting on NBCC bid underway; IDBI moves NCLAT to vote against plan

The voting on the NBCC bid began at noon on May 31 and is expected to continue for ten days until June 10.

Vandana Ramnani @vandanaramnani1

Even as homebuyers came forward to vote in large numbers on the NBCC resolution plan to take over embattled realty firm Jaypee Infratech on May 31, sources told Moneycontrol that IDBI Bank filed an application before NCLAT seeking permission for secured financial creditors to vote against the bid.

Thousands of buyers have voted on the NBCC resolution plan until now, sources said. The voting on the bid began at noon on May 31 and is expected to continue for ten days until June 10.

IDBI, the chief lender to Jaypee Infratech, in its application submitted on May 31 to the National Company Law Appellate Tribunal (NCLAT), said that the secured financial creditors be allowed to vote against the resolution plan, sources said.

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It said that the interim resolution professional (IRP) and the committee of creditors (CoC) of Jaypee Infratech be allowed to explore other alternatives that include inviting fresh expression of interest or consider a resolution plan that may have been submitted by other bidders, sources said.

Earlier, on the bankers' plea, the NCLAT had on May 17 annulled voting by homebuyers and lenders on NBCC's bid and allowed a renegotiation on the offer by May 30. The voting process started today, May 31.

Lenders of embattled Jaypee Infratech on May 30 decided to put to vote NBCC's resolution plan to take over the realty firm and complete construction of over 20,000 flats. The offer is being put to vote following directions by the NCLAT. The tribunal had asked lenders to negotiate with NBCC by May 30 so that voting could start from May 31.

The government’s construction arm had on May 30 also agreed to reduce the value of unsold inventories offered to lenders by around 25 percent, sources said, adding that 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.

Sources said that NBCC did not dilute other conditions in its offer, including an exemption from future tax liability which was mentioned in its bid.  In its revised offer, NBCC had proposed an infusion of Rs 200 crore equity capital, a 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 the NBCC were sought in the wake of Insolvency Resolution Professional (IRP) Anuj Jain flagging to the lenders that the state-owned firm's bid was conditional and non-binding because of the two conditions.

Adani Group's non-binding offer was not discussed at the 12th Committee of Creditors (CoC) meeting, sources said.

Business conglomerate Adani group had on May 28 made an unsolicited and non-binding bid to acquire Jaypee Infratech and 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 home buyers, sources had said.

Adani has promised to infuse another Rs 1,000 crore in two equal tranches of Rs 500 crore each to settle claims of workmen as well as secured and unsecured financial creditors, besides bearing the cost of the insolvency proceedings.

Adani Group had participated in the first round of the insolvency process but did not bid in the current round within the fixed timeframe.

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 this week, lenders had written to NBCC to sweeten its bid and demanded that the public sector firm should offer 1,426 acre land instead of 950 acre besides taking onus of getting approvals from income tax and development authorities.

"The resolution plan should reinstate 1,426 acres of land that was earlier offered to the secured financial creditors under the debt asset swap," law firm Cyril Amarchand Mangaldas has written on behalf of the lenders consortium, which comprised of 13 banks.

NBCC should undertake to get the requisite approval from YEIDA if the "deemed approval" from YEIDA as proposed in the bid for transfer of Yamuna Expressway and land to special purpose vehicles (SPVs) are not approved by the adjudicating authority, the letter had said.

On May 27, Jaypee Infratech lenders had held a meeting with NBCC to negotiate the latter's resolution plan.

Earlier this month, 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.

vandana.ramnani@nw18.com

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First Published on May 31, 2019 07:37 pm
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