The Jaypee Infratech (JIL) insolvency case is getting increasingly complicated.
JIL’s committee of creditors (CoC) proposed on May 24 that both the resolution applicants, the government’s construction arm NBCC and Mumbai-based Suraksha Group, be given seven days’ time to submit revised bids even as the interim resolution professional (IRP) declared that the addendum to NBCC’s final bid is non-compliant, sources said.
Voting on whether the two resolution applicants should be given seven days’ time to submit revised plans, is now expected to take place from May 27 to May 28, sources said.
“…we wish to inform you that the CoC has in its meeting held on 24th May, 2021 inter-alia decided: 1. To defer the voting scheduled to commence from 24th May, 2021 - 12.00 P.M. on the final Resolution Plan dated 18 May, 2021 of Suraksha Realty Limited along with Lakshdeep Investments and Finance Private Limited (“Suraksha”) and other items. 2. To put to vote from 27th May, 2021 to 28th May, 2021 - item of allowing further time to both Resolution Applicants for submitting final Resolution Plan; and other items,”according to a regulatory filing by Jaypee Infratech.
The CoC was to begin voting on the Suraksha bid on May 24.
If the revised bids by both the applicants are not allowed by the Committee, then Suraksha’s plan, whose voting was deferred on May 24, will be put to vote.
It was proposed by the lenders to grant further opportunity to both the resolution applicants to submit the revised plans in seven days’ time, sources told Moneycontrol.
Since the homebuyers’ representative did not have instructions from his party whether to agree to this lenders’ proposal, it was decided to put the proposal to vote.
If the CoC votes to approve the proposal asking for seven days’ time to the resolution applicants, then the two resolution applicants will be asked to submit their revised plans, they said.
However, if it rejects the proposal, then the voting on the Suraksha plan, which was deferred on May 24 will resume, they said.
The committee of creditors of debt-ridden Jaypee Infratech Ltd met on May 24 to discuss the addendum to its final bid filed by the NBCC.
The IRP was of the view that both the NBCC’s proposals offering dissenting financial creditors (DFCs) non-convertible debentures for payment of liquidation value and the proposal offering Guarantee Security Interest and Promoter Security Interest for payment of liquidation value, are not in accordance with the Insolvency and Bankruptcy Code (IBC), sources said.
NBCC had filed an addendum to its bid and also written a letter to the Interim Resolution Professional (IRP) Anuj Jain on May 24, drawing his attention to the legal opinion taken from retired judge Justice AK Sikri, which was submitted along with the NBCC’s Resolution Plan dated May 18, 2021.
Earlier, over the weekend, it had even questioned Anuj Jain’s jurisdiction in rejecting its offer.
On May 23, Jain informed shareholders that a meeting of the CoC is scheduled on May 24. The regulatory filing said that "Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) and in accordance with the requirements of sub-clause 16(g) of Clause A of Part A of Schedule III of LODR, we wish to inform you that a meeting of Committee of Creditors is scheduled to be held on 24th May, 2021."
On May 20, the CoC had decided to put to vote the offer made by the Suraksha group.
On Friday, Jaypee Infratech informed stock exchanges that the creditors would vote on Suraksha ARC’s plan between May 24 and May 27 after the IRP decided that the NBCC’s plan was non-compliant with provisions of the IBC.
Meanwhile, the Suraksha group had strongly objected to the creditor panel's meeting scheduled for May 24 to discuss the NBCC's addendum to its final bid, which was submitted on May 18 after the 4 pm deadline.
NBCC a blue-chip Indian government enterprise under the ownership of the Ministry of Housing and Urban Affairs.
The Mumbai-based Suraksha had threatened to take legal recourse against lenders as well as the IRP if there were any delays and change in the voting process already approved on its bid.
The Group had written a letter to the IRP and bankers, seeking fairness and transparency in the insolvency process.
"We wish to put on record strong objections to such actions to ratify and discuss the resolution plan of the other resolution applicant at this late stage...," Suraksha group said in the letter, a copy of which is with Moneycontrol.
It has said that it had submitted the resolution plan on May 18 within the stipulated time of 4 pm. NBCC's plan was submitted not only after stipulated timelines but also after opening and circulation of the Suraksha plan to CoC members, the letter said.
"In the interest of fairness and transparency of the process, the CoC should not have even considered the plan submitted by NBCC on May 18, 2021,” the letter said, adding, ``Any opportunity to the other resolution applicant by way of considering its plan/ revision/addendum thereto, after decision of the CoC to put up our resolution plan for voting, shall make a mockery of the entire process and shall be gross injustice to us whose plan was submitted within stipulated time, opened and circulated also amongst the CoC members," it pointed out.
Suraksha’s Resolution Plan submitted with changes to 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 are 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.
It intends to keep the Yamuna Expressway with itself. It has offered to complete pending works of around 20,000 housing units in 42 months.
Suraksha has also 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 for dissenting creditors will be met by the company by way of more funds or assets.
It has planned a Rs 125 crore fund infusion into Jaypee Infratech to start work, as well as 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 give Rs 65 crore in two instalments.
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 the 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 also proposed to set up a single-window redressal system to help resolve grievances of homebuyers. Such a structure would be put in place after the transfer date.
It had also considered homebuyers’ representatives in the steering committee, sources said.
Earlier, 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.
At 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 on May 15, 2021.
Suraksha Group had held a meeting with homebuyers on May 2, 2021, and NBCC 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 NBCC and complete insolvency proceedings in 45 days. The timeline ended 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.
“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,” the apex court said.
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 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 and State Bank of India, had voted in favour of the resolution plan submitted by the 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, 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.
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