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Jaypee Infratech creditors approve proposal to invite bids

Five other items on agenda including the proposal to replace Anuj Jain as resolution professional for the company’s ongoing bankruptcy procedure was rejected.

Vandana Ramnani @vandanaramnani1

Financial creditors of Jaypee Infratech including home buyers, fixed deposit holders and financial institutions have rejected all but one proposal, that of inviting bids for the embattled company, sources told Moneycontrol.

Among the proposals rejected in the vote was the move to replace Anuj Jain as the resolution professional for the company's ongoing bankruptcy procedure. Other issues included the appointment of a new resolution professional, appointment of Deloitte Touche Tohmatsu India LLP to assist the resolution professional, issue of home buyers objections to related party transactions between JIL and JAL, proposed fee for the resolution professional, acceptance of resignation of seven independent directors.

"All resolutions except one have been defeated due to lack of adequate vote share. Home buyers understand that with the current voting rules no resolution can be achieved. The concerned authorities need to correct the voting procedure and unless that happens the bankruptcy procedure is bound to fail and the company is destined to undergo liquidation," said a home buyer.

In a meeting held on October 17, CoC members had unanimously decided to conduct voting to invite bids for Jaypee Infratech through electronic means. The meeting was presided by insolvency resolution professional Anuj Jain. The voting portal was open from 5 am on October 19, 2018 until 12 pm on October 22.

The CoC was reconstituted on October 11 following the IBBI circular dated September 14, which outlined that only those financial creditors be included a part of the CoC that have submitted their claims with the chairperson. A total of 22,482 homebuyers were part of the CoC, who claim Rs 13,660 crore and their voting share is 58.2 percent, there are 557 FD holders with a total claim value of Rs 19 crore. As many as 13 banks are part of the CoC with a total claim value of Rs 9,783 crore and percentage voting share of 41.7 percent, sources said.

First on the agenda was the vote for replacement of Interim Resolution Professional Anuj Jain, with the appointment of Vijaykumar V Iyer as a resolution professional for the Corporate Insolvency Resolution Process. This was rejected as the voting share achieved was 57.2 percent, the company said in a filing to the exchanges. This means that Anuj Jain will continue as resolution professional.

At the first CoC meeting held in September, home buyers had rejected the reappointment of Anuj Jain as resolution professional, sources said.

The second item that came up for voting was to do with the appointment of Deloitte Touche Tohmatsu India LLP to assist the resolution professional in connection with the corporate insolvency resolution process of the company. This too was rejected as the vote share achieved was 57.3 percent.

The proposed fee of the resolution professional (who will be assisted by DTTILLP) at Rs 48.50 lakh per month, plus OPE, and GST, as a part of the insolvency resolution process costs to be paid out of the cash flows of the corporate debtor was also put to vote. At the CoC meeting last week, Kuldeep Verma, authorised representative of homebuyers had submitted that some home buyers had requested for re-negotiating the RP fee.

This was rejected as well, as the vote share achieved was 54.9 percent.

Homebuyers' objections to related party transactions between JIL and JAL put to vote was also rejected as vote share of 37.8 percent was achieved against the required 66 percent.

Financial creditors' vote for acceptance of resignation of seven independent directors was also rejected as its received just 28.6 percent votes in favour. At the meeting, financial creditors were apprised of the resignation of seven independent directors of the corporate debtor.

Meanwhile, 53.3 percent votes were cast for the approval of Form G (invitation for expression of interest). The voting percentage required was 51 percent, as per the filing to exchanges.

Other issues that were discussed at the meeting last week included home buyers call for a forensic audit into the affairs of JIL and clarification on the role of IRP in fixing RERA timelines. The chairperson clarified that the RERA timeline was fixed by the authority before the start of CIRP process and IRP has no role in fixing the revised timelines of delivery of flats.

The issue of Rs 750 crore plus interest penalty available with the NCLT Allahabad bench following the August 9 Supreme Court order was also discussed. Nine associations of homebuyers have filed an application with the NCLT seeking direction to release the amount for construction of incomplete projects. The next date of hearing is November 27.

Jaypee Infratech homebuyers may have a 62 percent say in the committee of creditors, but this voting share does not guarantee that the resolution plan will sail through, home buyers had said in a letter written to the Chairperson of the IBBI, MS Sahoo. Jaypee Wishtown homebuyers claimed that the present voting rules were skewed and bound to result in liquidation by design.

Although the amended Insolvency and Bankruptcy Code (IBC) treats home buyers as financial creditors and thus a part of the CoC that takes all crucial decisions, the law mandated that those who abstained from voting will be treated as a negative vote.

The NCLT had on August 10 last year, admitted IDBI Bank's plea to initiate insolvency proceedings against JIL for defaulting on a Rs 526-crore loan. While admitting the plea of IDBI Bank, the NCLT had appointed Anuj Jain as IRP to manage the company's business.

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First Published on Oct 23, 2018 08:22 pm
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