Jaypee Infratech case: NCLT clears NBCC resolution plan

In a major relief to homebuyers, the National Company Law Tribunal (NCLT) on March 3 approved the proposal of the government’s construction arm NBCC to acquire the embattled Jaypee Infratech through an insolvency process 'with modifications'.

The Rs 750 crore deposited by Jaiprakash Associates would also be part of the plan, the principal bench of NCLT headed by Acting President B S V Prakash Kumar, said. The order will be out on March 4.

"This is an extremely welcome step.. my purpose of filing the PIL was to ensure the homebuyers get their due from a reliable construction company. The courts by exercising extraordinary powers have restored the faith in the judiciary," said Ashwarya Sinha, lawyer for main petitioner Chitra Sharma, said.

Moneycontrol had earlier reported that NBCC's plan to acquire Jaypee Infra may get approval by March 3.

Homebuyers too expressed relief at the turn of events.

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"We are extremely satisfied with today's NCLT judgement, it brings a closure to a long-drawn legal battle spanning 2.5 years across various judicial fora. The 750 crore that has been awarded to JIL which in turn will be handed over to NBCC will kick-start the construction process. We urge NBCC to start the process of takeover of this company and start construction at the earliest," Ranjeet Jha, a homebuyer, told Moneycontrol.

Insolvency experts described the NCLT’s decision as a historical one.

"This is a historical milestone in the journey of IBC. Jaypee was the most complex cases of all with large number if stakeholders and competing as well as conflicting lenders. On a lighter note, it had all the masala of a suspense thriller and was bound to be a box office hit, sooner than later," said Sumant Batra, insolvency lawyer of international repute.

Last week, Moneycontrol had reported that after the Supreme Court upheld the National Company Law Tribunal order directing Jaiprakash Associates (JAL) to return 758 acres of land, which was pledged with several banks, to its debt-laden subsidiary firm Jaypee Infratech Ltd (JIL), the road is now clear for NCLT to approve the NBCC resolution plan, sources said.

"The plan is likely to be cleared by NCLT by March 3. Funds worth Rs 2,000 crore have already been tied up to start construction," sources had told Moneycontrol.

Around Rs 6,600 crore is required to complete construction of around 20,000 housing units in Jaypee projects.

NBCC has proposed to complete over 20,000 pending flats in the next three-and-a-half years. Homebuyers' claim amount to Rs 13,364 crore and lenders' claim worth Rs 9,783 crore have been admitted.

In its bid in December, 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.

Sources told Moneycontrol that now that the clearance by NCLT has come through, NBCC will be handed over the letter of intent (LoI), which is an agreement that confirms the course of action that will be taken after the takeover of Jaypee Infratech,  adding that the successful bidder will also have to submit a performance bank guarantee.

Post the order, NBCC may take another 90 days to be ready with the formalities such as final tower-wise completion schedule, and collecting data required to prepare tenders.

"The zero period will start from March 4 onwards and construction may start by June after the 90-day period that would be given to NBCC for implementation of the plan," sources told Moneycontrol.

On November 6, the Supreme Court directed completion of Jaypee Infratech's insolvency process within 90 days, adding that the revised resolution plan would be invited only from NBCC and Suraksha Realty.

After the voting results were declared in December, the interim resolution professional, Anuj Jain, had filed a report with the adjudicating authority, which in this case is National Company Law Tribunal (NCLT) Allahabad, by December 21.

The day marked the 45th day since the Supreme Court gave its directions. The NCLT had to issue its final order within the next 45 days. This time period has since been extended by four weeks until March 4, legal sources said.

The December round of voting was the third round of bidding process to find a buyer for Jaypee Infratech, which went into Corporate Insolvency Resolution Process (CIRP) in August 2017.

More than 10,000 homebuyers and major lenders of Jaypee Infratech, including IDBI Bank and State Bank of India had voted in favour of the resolution plan submitted by the government's construction arm NBCC to acquire the embattled real estate firm.

On February 26, the Supreme Court upheld the NCLT order directing JAL to return 758 acres of land, which was pledged with several banks, to its debt-laden subsidiary firm JIL.

"The 758 acre of land which comes back to JIL will finally go to NBCC. For homebuyers, this additional land will make the NBCC resolution plan more financially viable," homebuyers had said.