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Jaypee Infratech lenders free to vote for or against NBCC bid: NCLAT

NCLAT also directs the committee of creditors not to finalise rejection of the NBCC bid without the court's consent.

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The appellate bankruptcy court on June 10 declined to pass an order on Jaypee Infratech's prime lender IDBI's petition opposing NBCC's bid to take over the embattled firm and said that its lenders are free to vote for or against the bid, sources told Moneycontrol.

NCLAT also directed the committee of creditors not to finalise rejection of the bid by the government's construction arm without the court’s consent, they said.

"As the voting is on, which is likely to be completed today by 5.00 p.m., we are not inclined to pass any specific order in the present I.A. No. 1857 of 2019 filed by the ‘IDBI Bank Limited’," the order said.

Voting on the NBCC bid for takeover of Jaypee Infratech ended at 5 pm on Monday. Sources said over 12,000 have voted so far. The bid requires 66 percent votes in its favour to make the cut and acquire the insolvent real estate company.

NCLAT also directed the resolution professional to report about the outcome of the order directly to it, instead of Allahabad bench of NCLT, which is supervising insolvency resolution process of Jaypee Infratech.


"In terms or earlier order May 17 and May 19, Resolution Professional instead of placing before the adjudicating authority (NCLT), must place matter before appellate tribunal for further orders," the order said.

The NCLAT also pre-poned its next hearing to July 2 from July 17.

During the hearing, the appellate tribunal also clarified that votes of the absentees would not be counted in the total voting percentage.

"We make it clear that if any of the ‘Financial Creditor’ remains absent from voting, their voting percentage should not be counted for the purpose of counting the voting shares, as held by this Appellate Tribunal in ‘Tata Steel Ltd. vs. Liberty House Group Pte. Limited & Ors.’ – ‘Company Appeal (AT) (Insolvency) No. 198 of 2018’ disposed of on 4th February, 2019," the order said.

Lenders of Jaypee Infratech had earlier 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 was put to vote following directions by the NCLAT. The tribunal had earlier asked lenders to negotiate with NBCC by May 30 so that voting could start from May 31.

IDBI Bank, the prime lender to JIL, which has around 18 percent vote share is against the bid on the ground of the resolution plan being "conditional". It had on May 31 filed an application before NCLAT seeking permission for secured financial creditors to vote against the bid.

It had 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 had 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.

Last week, the National Company Law Tribunal (NCLT) rejected a plea by a group of homebuyers to treat them as a separate sub-class of creditors at committee of creditors (CoC) meetings for the insolvency resolution of Jaypee Infratech.

The plea sought this classification so that absentee homebuyers’ votes can be factored in as ‘yes’ votes.

In his judgment, NCLT’s Delhi bench (member, judicial) R Varadharajan had said, “The CoC, taking into consideration Section 21(2) of IBC (Insolvency and Bankruptcy Code), 2016, shall comprise all financial creditors, and must be construed as one and cannot be segmented class-wise particularly for the purpose of computation of voting share.” The bench also refused to lower the requirement of vote share for adoption of a resolution.

NBCC 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 had 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.

Business conglomerate Adani group had also 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.

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.
Vandana Ramnani

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