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Jaypee Infratech saga: NBCC's revised offer fails to make cut due to lack of approvals

Offer by Mumbai-based Suraksha Group will likely be the only one to be put to vote next week.

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Due to lack of approvals by the administrative authorities, the revised plan submitted by NBCC, which is in the race to acquire embattled firm Jaypee Infratech, has been found to be non-eligible for consideration. The offer by Mumbai-based Suraksha Group was the only plan found to be compliant as per Insolvency and Bankruptcy Code norms and would now be put to vote next week, sources told Moneycontrol.

"NBCC has not backed out. They informed the CoC meeting that they did not have approvals from the government so far. They wanted that the plan should be considered without subject to approvals which cannot be done. Therefore, the NBCC plan was found to be non-compliant. Since it does not have the approval to submit the plan, their plan cannot be considered to be legally compliant. Therefore, as far as the NBCC plan is concerned it cannot be considered by the CoC,” sources said, adding it was therefore decided that the Suraksha offer was the only compliant plan and would be put to vote on April 29. .

Sources said that the revised offer submitted by NBCC had said that it had applied to its administrative authorities  that include Niti Aayog, Department of Investment and Public Asset Management, Ministry of Finance and Ministry of Housing and Urban Affairs for their approval. It had also stated that NBCC had the right to amend, modify or supplement the resolution plan in terms of such approvals, prior to the submission of the resolution plan before the adjudicating authority.

NBCC and Suraksha, which are in the race to acquire the Jaypee Group firm, were asked by the lenders to sweeten their offers and both the potential buyers have submitted their revised offers under the Insolvency and Bankruptcy Code (IBC).

Lenders of debt-ridden Jaypee Infratech met on April 26 to discuss revised bids submitted by state-owned NBCC and Suraksha Realty to acquire the realty firm and complete over 20,000 delayed apartments in Noida.


"Revised resolution plans have been received from NBCC and Suraksha Realty-led consortium and will be placed for discussion amongst CoC (committee of creditors) members on resolution plans received from resolution applicants in the meetings to be held on April 26 and April 30, respectively," Jaypee Infratech Interim Resolution Professional (IRP) Anuj Jain had said in a regulatory filing on April 25.

In its previous bid, NBCC had offered 1400 acres of land worth Rs 6,000 crore and equity infusion of Rs 500 crore upfront. In the revised bid, it has offered 950 acres of land worth Rs 5,001 crore and reduced the equity infusion from  Rs 500 crore to Rs 200 crore, sources said.

For secured financial creditors, it has offered a payment of upfront amount of Rs 1500 crore, 100 percent in Yamuna Expressway SPV, 100 percent in land bank SPV. The land bank SPV is worth Rs 5001 crore and totals 950 acres

Suraksha had earlier offered about Rs 20 crore as upfront payment but in the revised bid, it has proposed an equity infusion of Rs 50 crore and a working capital loan of Rs 3000 crore against a requirement of Rs 2404 crore to complete construction work, sources said, adding their completion timelines are on an average one year less than NBCC.

Sources also said that fresh bids may have to be invited if the Suraksha bid does not go through. But that can happen only if extension is granted by NCLT. The 27-day deadline under IBC ends on May 27.

Business conglomerate Adani Group had also entered the fray by putting in a bid to acquire Jaypee Infratech.

The National Company Law Tribunal (NCLT) in 2017 had admitted the application of a consortium led by IDBI Bank seeking resolution of Jaypee Infratech, and appointed Anuj Jain as the insolvency resolution professional (IRP) to manage the company's business and invite bids from investors.

In the first attempt under the insolvency process, lenders had rejected the Rs 7,350 crore bid of Lakshdeep, part of Suraksha Group, as they found it to be substantially lower than the company's net worth and assets.

Therefore, the IRP in October 2018 started a fresh initiative to revive Jaypee Infratech.

Last week, promoter of embattled real estate firm Jaypee Infratech Manoj Gaur had once again offered to complete the much-delayed real estate projects within a period of four year by pumping in Rs 1500 crore in an escrow account but homebuyers were skeptical and termed the meeting held on Friday as an ‘eyewash’, ‘old wine in new bottle’ and questioned the timing of the meeting saying that the meeting was called to garner support from buyers whose approval is required for any resolution plan or settlement plan to go through.

Gaur during the meeting with homebuyers claimed that he was a ‘victim of circumstances’, made a presentation and proposed that Rs 1500 crore would be set aside in an escrow account for completion and construction of the projects that are proposed to be completed within four years.

Briefing reporters on the sidelines of the meeting, Ajit Kumar, adviser Jaypee Group, said that the company is aware of the problem faced by homebuyers. “We have submitted a proposal under Sec 12A of the IBC procedure in April. To begin with, we will set aside Rs 1500 crore in an escrow account, which will be monitored by a committee. The entire amount will be used for construction and completion of the houses. The monitoring committee would constitute a  retired judge of a Supreme Court, a technical member and I will be the convenor, he had said.

As many as 22,000 homebuyers are stuck because of significant delay in delivery of flats by Jaypee group's debt-ridden firm Jaypee Infratech, which is undergoing insolvency proceedings.

The realty firm has an outstanding debt of nearly Rs 9,800 crore, of which Rs 4,334 crore pertains to IDBI Bank. Other lenders are IIFCL, LIC, SBI, Corporation Bank, Syndicate Bank, Bank Of Maharashtra, ICICI Bank, Union Bank, IFCI, J&K Bank, Axis Bank and Srei Equipment Finance.

Jaypee Infratech is developing about 32,000 flats, of which it has delivered 9,500 units. JAL had deposited Rs 750 crore in the registry of the Supreme Court for refund to buyers. However, this amount was transferred to the NCLT as per an order of the apex court.
Vandana Ramnani

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