[ecis2016.org] Suraksha Group has deposited Rs 100 crores as a ‘performance bank guarantee’, as part of the process to take control of the embattled Jaypee group
After its successful bid to acquire Jaypee Infratech Ltd (JIL) in June 2021, Suraksha Group has deposited Rs 100 crores as a ‘performance bank guarantee’ with the interim resolution professional (IRP) Anuj Jain.
You are reading: Jaypee insolvency: Suraksha deposits Rs 100-crore performance bank guarantee
On June 23, 2021, the Mumbai-based builder pipped state-run NBCC, to take control of the embattled Jaypee. The builder has submitted the bank guarantee after receiving a letter of intent from the IRP.
Under the resolution plan approved in June, Suraksha, which won the bid to take over Jaypee by a wafer-thin margin of 0.12%, will infuse interim funds to the tune of Rs 300 crores, to complete the pending housing projects of the trouble-hit real estate company.
Once the National Company Law Tribunal (NCLT) and the Supreme Court approve the resolution plan for Jaypee, the Sudhir Valia-led Suraksha, which goes by the formal name Suraksha Asset Reconstruction Limited or Suraksha ARC, will start the process to complete over 20,000 pending housing units in the national capital region.
If all goes according to the current plan and Suraksha does take over Jaypee Infratech, the acquisition will result in the resolution of Rs 22,600 crores of debt given by banks to the cash-hit Jaypee, which was sent to the bankruptcy court in August 2017.
However, industry insiders are of the view that Suraksha’s resolution plan faces lingering threats of litigation, since NBCC has the option to challenge the resolution at the NCLAT, the National Company Law Appellate Tribunal (NCLAT) and then, the Supreme Court.
Even if the judgement of the committee of creditors (CoC) prevails ultimately (which has been the case if we look at precedence), it might certainly prolong the wait for home buyers for their dream homes that have been pending for over a decade now.
(With inputs from Sunita Mishra)
Home buyers, banks approve Suraksha’s bid to take over Jaypee Infratech
Over 98% of the votes were in favour of Suraksha’s bid to acquire JIL
June 24, 2021: Real estate developer Suraksha Group, on June 23, 2021, received an approval from the Committee of Creditors (CoC), including financial creditors, of the embattled Jaypee Infratech Ltd (JIL), to take over the debt-ridden builder after a 10-day-long voting. This marks the end of uncertainties for home buyers spanning a four-year period since JIL was referred for insolvency resolution.
A total of 12 banks and over 20,000 home buyers have voting rights in JIL’s CoC. The e-voting on the bids started on June 14, 2021. Sudhir Valia-controlled Suraksha won the bid to take over the projects of the financially ailing JIL, after four rounds of bidding process to find a buyer for JIL. “Suraksha Group has won the bid with 98.66% votes,” JIL’s Interim Resolution Professional (IRP) Anuj Jain told media.
At least 66% votes were required for the approval of a bid. Public construction company, NBCC, which is already working on completing pending projects of the now-defunct Amrapali Group, received 98.54% votes.
In its bid, Suraksha, whose owner Valia is a relative of Sun Pharma’s Dilip Sanghvi, India’s country’s biggest pharma company, has proposed to Rs 3,000 crores upfront to start work on JIL’s pending projects while NBCC proposed to come up with Rs 2,000 crores.
This marks an end to the intense bidding war between the Mumbai-based Suraksha and state-run NBCC to gain control of JIL, a subsidiary of Jaiprakash Associates. The end of the bidding war comes as a huge relief to over 20,000 home buyers, who have invested in various projects of JIL and have been waiting for the delivery of their homes for years, in some cases for more than a decade.
However, while home buyers and creditors have cleared Suraksha’s bid, it still needs approval from the National Company Law Tribunal (NCLT) and the Supreme Court, before it can formally takeover JIL’s projects.
(With inputs from Sunita Mishra)
Jaypee insolvency: Lenders to vote on revised bids of NBCC, Suraksha Group
The voting on the revised bids, to decide who will take over debt-laden Jaypee, will take place between June 14 and June 23, 2021
June 14, 2021: In a process that might decide who takes over Jaypee Infratech Ltd (JIL), four years after the entire process was initiated, lenders to the embattled real estate company will vote on the revised bids of NBCC Ltd and Suraksha Group.
The voting starts on June 14 and is expected to end on June 23, 2021, after a decision in this regard was taken at a meeting of the committee of creditors (CoC), which includes members of 13 financial institutions and a representative of over 20,000 home buyers, on June 10, 2021. In the committee of creditors, home buyers have 56.63% voting rights while banks have about 43.25% rights. The remaining rights are held by fixed deposit holders.
On May 27, 2021, Jaypee’s lenders had voted for extending the bidding process under the Corporate Insolvency Resolution Process (CIRP), allowing both the companies to submit their revised bids by June 4, 2021, to acquire the builder.
State-run NBCC and Mumbai-based Suraksha Group have been engaged in an intense bidding war, to acquire the assets of the company, which was earlier sent to the insolvency court, over its failure to deliver various mega housing projects in the NCR. The company that wins the bid to acquire Jaypee, will be responsible to complete and deliver over 20,000 residential units in this market. Note here that both the companies had earlier projected they would take an estimated 42 months to finish Jaypee’s pending projects, some of which have been delayed for over a decade.
Insolvency resolution professional Anju Jain expects the process to be over by July 7, 2021. Recall here that this is the fifth round of bidding for the trouble-hit JIL, a subsidiary of Jaiprakash Associates, after the real estate company was dragged to the NCLT by a consortium of banks, led by IDBI Bank over loan defaults. On previous occasions, NBCC and Suraksha had both been asked to revise their bids, to make them compliant with insolvency norms.
(With inputs from Sunita Mishra)
Jaypee insolvency: CoC may give NBCC, Suraksha more time to submit revised bids
The CoC was expected to start the voting on Suraksha’s bid for Jaypee on May 24, 2021, after examining a revised bid by NBCC on the same day
May 25, 2021: In a move that is indicative of the fact that Jaypee home buyers may still be far from seeing the delivery of their pending homes, the committee of creditors (CoC), on May 24, 2021, decided that the two companies bidding for the now-defunct real estate company, may be given a week’s time to submit revised bids.
Government-run NBCC and Mumbai-based Suraksha Group are the two contenders in the race to acquire Jaypee Infratech Limited (JIL), a subsidiary of the Jaiprakash Associates Limited.
The CoC was expected to start the voting on Suraksha’s bid offer for JIL on May 24, after examining a revised bid by NBCC on the same day, which inserted an addendum in its resolution plan to make it IBC-compliant. The CoC is expected to vote, on May 28, on whether the two companies should be given seven days’ time to submit revised plans.
If the extension is approved, NBCC and Suraksha will submit their bids by June 4, 2021 and the CoC will hold a meeting on June 7, to vote on their bids. In case the CoC votes against allowing the two companies to submit revised bids, Suraksha’s resolution plan, which was scheduled to be voted upon on May 24, will be taken up for voting.
On May 21, 2021, JIL informed the stock exchanges that the CoC would vote on Suraksha’s plan between May 24 and May 27, after the insolvency resolution professional (IRP) Anuj Jain decided that NBCC’s plan was non-compliant with provisions of the insolvency code.
However, after the public construction company, in a strongly-worded letter questioned the IRP rationale and jurisdiction behind terming its plan non-compliant with provisions of the IBC, the CoC decided to take up for consideration NBCC’s revised bid in which it inserted an addendum to make it IBC-compliant.
Reacting adversely to the CoC move, Suraksha said that 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, which was submitted after the 4 PM deadline.
“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 the stipulated time, opened and circulated also amongst the CoC members,” it said in a letter to the IRP.
(With inputs from Sunita Mishra)
Jaypee insolvency: CoC to look into revised NBCC bid before voting on Suraksha’s offer
The CoC had earlier rejected NBCC’s resolution plan, calling it non-compliant with the insolvency law
May 24, 2021: In a move that may further delay the Jaypee insolvency resolution process, the Committee of Creditors (CoC) will meet on May 24, 2021, to review NBCC’s revised resolution offer for the acquisition of Jaypee Infrastructure (JIL). On May 20, 2021, the CoC had rejected NBCC’s offer, terming it non-compliant with the insolvency code and previous orders of the Supreme Court (SC) in the matter.
The move by the CoC to look into the revised bid by the public construction company came, after state-run NBCC added an addendum to its offer, reiterating to bring in Rs 2,000 crores in the next three years, while also threatening to move the SC against the CoC’s decision to declare its bid offer non-compliant with the insolvency act. It also wrote a strongly-worded letter to the interim resolution professional Anuj Jain, questioning his interpretation of its bid offer.
Home buyers, who have been waiting for completion of their pending homes, some even for over a decade, have showed displeasure over the CoC’s move, which might slightly prolong the final resolution process.
On May 19, 2021, NBCC and Suraksha Group submitted their resolution plans to take over JIL in the fourth round of bidding. While rejecting NBCC’s resolution plan on May 20, 2021, the CoC decided to start a voting process on Suraksha’s bid. “The CoC has, in its meeting held on May 20, 2021, decided to put to vote the final resolution plan dated May 18, 2021, of Suraksha Realty Limited along with Lakshdeep Investments and Finance Private Limited and other items. The e-voting on items shall commence on May 24 (12 PM) and shall close on May 27, 2021, (5 PM),” JIL said, in a regulatory filing.
This is the fourth round of the bidding process over JIL’s takeover since the insolvency process started in 2017. In March 2021, the SC had directed the CoC to complete the JIL resolution process in 45 days, which lapsed on May 8, 2021.
(With inputs from Sunita Mishra)
Suraksha emerges as the biggest bidder for Jaypee Infratech
In the fourth round of bidding, Suraksha has made an offer of Rs 6,984 crores for Jaypee, as against NBCC’s Rs 4,873-crore offer
May 20, 2021: Mumbai-based Suraksha Asset Reconstruction Company (ARC) has inched closer towards gaining control of Jaiprakash Associates Limited’s arm Jaypee Infratech Ltd (JIL), after becoming the highest bidder to purchase the embattled developer.
In the fourth round of bidding since 2017, Suraksha ARC made an offer of Rs 6,984 crores to the company creditors, as compared to state-run NBCC’s Rs 4,873-crore offer. The entities have been in the race to acquire debt-laden JIL but the process has been tangled in litigation since the bidding war first started.
After NBCC received an approval from the National Company Law Tribunal (NCLT) to acquire JIL, Suraksha challenged the order in the SC. Subsequently, a fourth round of bidding by the two contenders was ordered by the top court.
Creditors to the company will vote on the revised proposals by the two competitors by May-end.
A special purpose vehicle (SPV) established by the parent group to construct the Yamuna Expressway, JIL was sent for insolvency resolution in 2017 under the Insolvency and Bankruptcy Code, 2016, after it defaulted on loans of Rs 22,000 crores.
Suraksha’s resolution plan for Jaypee
In its offer, the Sudhir Valia-promoted Suraksha, which has promised to deliver all pending housing units of JIL within 42 months, has offered to pay Rs 125 crores upfront to complete pending housing projects of the group and to infuse Rs 3,000 crores within 90 days of the approval date for completing the stalled projects. It will also put Rs 300 crores receivable from Jaiprakash Associates, for completing the pending housing units.
NBCC’s resolution plan for JIL
In its resolution plan for JIL, government-owned NBCC, which has also won the bid to construct pending projects of now-defunct Amrapali Group, has also set a 42-month deadline to deliver the pending JIL projects.
NBCC also proposes to set up separate SPVs for the Yamuna Expressway and JIL real estate projects.
Suraksha writes to CoC on extension for submission of bids
Meanwhile, Suraksha has written to financial creditors and objected to extending the deadlines for submitting bids. The move by Suraksha came after NBCC, on May 18, 2021, sought further extension from JIL’s Interim Resolution Professional (IRP) to submit a revised bid, after some home buyers raised objections to its resolution plan. In a meeting on May 15, 2021, the Committee of Creditors (CoC) discussed the revised bids of NBCC and Suraksha, following which NBCC sought further extension to present a revised bid.
In a letter to JIL’s IRP Anuj Jain and the members of CoC, Suraksha said this was against the spirit of the Supreme Court order dated March 24, 2021. In its order, the apex court had directed the IRP to call bids only from NBCC and Suraksha and complete the insolvency process by May 8, 2021.
(With inputs from Sunita Mishra)
Jaypee insolvency case: NBCC and Suraksha Realty submit fresh bids
This is the fourth round of bidding process for acquisition of Jaypee Infratech, since it entered insolvency in August 2017
May 13, 2021: The war between state-run NBCC and Suraksha Realty to take control of embattled real estate builder Jaypee Infratech (JIL) is heating up, with both the companies submitting revised bids on May 10, 2021, for buying controlling assets of the builder. The revised bids by both the players, comes days after they held meetings with Jaypee home buyers separately.
This is also the second time the construction companies have revised their bids, since the Supreme Court (SC), in April 2021, asked them to submit fresh bids to acquire Jaypee Infratech through the insolvency process.
This is the fourth round of bidding process for acquisition of Jaypee Infratech, since it entered insolvency in August 2017 after the National Company Law Tribunal (NCLT) admitted an application by an IDBI Bank-led consortium.
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“In consideration of further discussions and meetings with financial creditors and other stakeholders, NBCC has again submitted the revised Resolution Plan for Jaypee Infratech on May 10, 2021,” the company said in a regulatory filing. The revised bids could be discussed at the 20th committee of creditors meeting on May 15, 2021.
While public builder NBCC has assured home buyers that it will hand over 70% flats within 30 months in its revised bid, Mumbai-based Suraksha Group is now offering Rs 3,000 crores as working capital for construction of projects. Its earlier proposal was for Rs 2,000 crores. Both the companies have also claimed that they would open customer grievance and redressal centres, to handle buyers’ issues.
In the meantime, the resolution process for the Jaypee case might be extended for another 45 days. According to a March 2021 order of the SC, JIL’s interim resolution professional had to complete the resolution proceedings in the matter by May 8, 2021. Another extension of the same is on the cards, since the second wave of Coronavirus has made it extremely difficult to complete the modalities involved.
Over 20,000 home buyers, who have been waiting for their units in various housing projects of Jaypee, could finally heave a sigh of relief, when one company wins the bid to buy the bankrupt builder and start work on pending projects.
(With inputs from Sunita Mishra)
Update on April 14, 2021:
In an earlier ruling, the Supreme Court (SC) had set a 45-day deadline for resolution of the Jaypee case. In its judgement on March 24, 2021, the apex court said that the Insolvency Resolution Professional (IRP) can invite modified or fresh resolution plans from NBCC and Suraksha Realty can submit new resolution plans. As per the directions, the creditor’s committee reviewed the bids.
NBCC proposed to transfer 100% shareholding of a ‘Land Bank SPV’ containing lands aggregating 1,526 acres to institutional financial creditors in lieu of debt. It has also offered to transfer 82% shareholding in the ‘Expressway SPV’ which would include concession rights of Yamuna Expressway and 4798 acres of land to the financial creditors. The value of the land bank would be as per circle rates or government-approved rates.
On the other hand, Suraksha Group has proposed to pay a total of Rs 9,211 crores, which includes Rs 5.45 crores for CIRP costs, Rs 0.50 crores to operational creditors, and Rs 38.38 crores to FD Holders. It has proposed to pay institutional financial creditors Rs 7,534 crores out of sale/sub-lease of 2,034 acres of land in Jaganpur, Tappal and Agra, according to the plan submitted. It has also set aside Rs 1,623.76 crores as working capital funds for the construction of real estate projects for the delivery of homes, including refunds to home buyers.
The process of selecting the new bidder is expected to be completed within 45 days, as ordered by the Supreme Court.
The IRP will then take steps to complete the voting process of the Committee of Creditors (CoC) and submit the report to the adjudicating authority, within the extended period of 45 days. The saga, therefore, continues. NBCC has asked for four more weeks to submit a modified resolution plan to the National Company Law Tribunal (NCLT) stating that there has been a ‘significant commercial impact’ on the operations of the corporate debtor due to the COVID-19 pandemic and that fresh approvals would be required from the government. The previous resolution plan was submitted post a detailed technical analysis. Now, this needs to be reanalysed and cost escalations, changes in balance cost of construction and material changes, etc that happened in the interim will need to be studied before a fresh resolution plan can be submitted.
On August 6, 2020, the SC had transferred all pending appeals related to the Jaypee Infratech (JIL) insolvency case, from the National Company Law Appellate Tribunal (NCLAT), back to itself. The motive behind this, was to ensure that there was no further delay in resolving the case.
So far, no construction has taken place over the last six months at the site and over 20,000 home buyers are still staring at uncertainty, despite the fact that NBCC’s resolution plan had been approved. NBCC said that the National Company Law Tribunal (NCLT) had made some ‘unilateral modifications’ to its resolution plan by resorting to objections from ICICI Bank as also the Yamuna Expressway Industrial Development Authority. The resolution plan was given a go-ahead by a 97.36% vote share, by the Committee of Creditors. The NCLT even asked the state-owned construction company to pay its due to ICICI in 12 equated monthly installments, within a period of 18 months. However, the counsel appearing for NBCC has said that it cannot be forced to do so. “NBCC cannot be forced to execute the RP (resolution plan) in these situations. If it goes ahead with the construction, there is no return for it,” senior counsel UK Chaudhary said. Keeping in mind the delay, the SC has transferred all pending appeals to itself, while directing the interim resolution professional, Anuj Jain to continue with his role.
Amid the COVID-19 pandemic, large insolvency cases that shook the Indian real estate sector, such as the Jaypee Infratech case, may take longer than expected to see a resolution. The Jaypee insolvency case first surfaced on August 9, 2017, when the Allahabad bench of the National Company Law Tribunal (NCLT) admitted the petition filed by IDBI Bank against Jaypee Infratech, under Section 7 of the Insolvency and Bankruptcy Code 2016.
In another development, construction of Jaypee’s Kalypso Court Phase II project, resumed starting September 19, 2020. The effort was taken under the UP RERA’s new rehabilitation model that brings together both, buyers and builders, to work towards the completion of the project. JAL has agreed to infuse Rs 45 crores and the expected completion would be within 15 months. UP RERA will hereon review the progress of the project on a quarterly basis. A chartered accountant will be appointed for the concurrent audit of the project, till its completion. This project will move under the special category of projects under rehabilitation, as per Section 8 of the RERA.
Here’s all that you need to know about the Jaypee case.
What does 2021 hold for the Jaypee case?
For over three years now, the Jaypee insolvency case has been pending, with home buyers still waiting to get hold of their flats in Noida and Greater Noida. The authorities have ordered an investigation against Jaiprakash Associates Ltd (JAL) and Jaypee Infratech Ltd (JIL). The Serious Fraud Investigation Office (SFIO) will look into aspects like money diversion. The orders came recently, from the Ministry of Corporate Affairs. Some banks may also come under the scanner, for failing to do the due diligence at the right time. Meanwhile, state-owned National Buildings Construction Corporation (NBCC), which emerged as the successful bidder, has asked the National Company Law Appellate Tribunal (NCLAT) to downsize some of its liabilities. Unfortunately, now, due to the Coronavirus, the wait may be longer for some home buyers, some of whom have already waited for a decade, for their flats.
[ecis2016.org] Impact of Coronavirus on Indian real estate
2017: Early days of the Jaypee insolvency case
Assurances flow in
With the NCLT admitting the petition, Jaypee Infratech was asked to clear the outstanding debt within 180 days, or find a resolution within the specified time period. This time period could be extended by another 90 days and Jaypee’s home buyers and banks could raise claims by August 24, 2017. The NCLT also appointed Anuj Jain as the CEO of Jaypee Infratech, to oversee the insolvency proceedings. The dilemma of home buyers came to the fore with a number of protests both, online and on the roads. There was some respite, when the Noida Authority CEO Amit Mohan Prasad said that the “Hard earned money of home buyers will not be allowed to go down the drain.”
The Authority said that it would work on rescheduling the payment plan, under which the developer will be directed to deposit the dues within a specified period. The unsold inventory of Jaypee was to be taken over by the Authority and auctioned, to recover dues and it had already been written to the Uttar Pradesh government for permission. In the interim, before August 24, 2017, a home buyer, who was a financial creditor, needed to sign the specified form.
The former finance minister, late Arun Jaitley, also assured that all those buyers who had bought a property would get the possession of their units. The Supreme Court also heard a Public-Interest Litigation (PIL) on behalf of over 30,000 home buyers, who had invested in Jaypee Infratech’s projects. A senior advocate representing the home buyers was quoted saying that once those affected signed the forms (Form F), it would prevent them from initiating any case against the developer in a consumer court, which thwarts their right to justice.
As the number of home buyers filing PILs increased, the Supreme Court (SC) adjourned the hearing to September 4, 2017.
Home buyers demand scrutiny
With about Rs 16,000 crores stuck in Jaypee Infratech’s projects, home buyers pleaded that any resolution plan should monitor and enforce that the funds for project completion should be put into an escrow account, according to the norms of the real estate law. Meanwhile, these home buyers also asked the Uttar Pradesh government to intervene meaningfully.
Jaypee’s scrapped projects
The Yamuna Expressway Industrial Development Authority (YEIDA) assured home buyers in Jaypee’s six scrapped projects that they would be refunded at any cost. The scrapped projects included Buddh Circuit-01, Buddh Circuit-02, Nature View, Boulevard, Aman-III and Udaan, where construction had not even started, although possession was scheduled for 2016. In the worst case scenario, the YEIDA maintained that it would cancel Jaypee’s lease and liquidate its assets to recover the money, if the developer failed to pay the first installment of refunds by the end of October 2017. There were over 3,300 home buyers who had invested in these projects.
UP CM appoints committee
A three-member committee was appointed by the Uttar Pradesh chief minister Yogi Adityanath, to look into the grievances of home buyers. Urban housing minister Suresh Khanna, industries minister Satish Mahana and state minister of cane development and sugar mills Suresh Rana were the members of the committee, which, after much deliberation, brought to notice that co-developers could be brought in, to complete the projects.
Home buyers were assured that they need not pay any outstanding amount, till the units were completed. The delivery of these flats was the focus, because a majority of the buyers preferred to take the flat and not the refund or compensation.
SC restricts movement of directors and MDs
The Supreme Court directed JAL to deposit Rs 2,000 crores by October 27, 2017 and the directors and managing directors of the company were directed to not leave the country, without permission. These measures were taken to safeguard the interests of home buyers, most of whom belonged to the salaried class.
Adityanath also assured home buyers in Jaypee’s projects that the developer firm would deliver 600 flats monthly, starting from November, 2017. This was the decision communicated to the three-member committee.
SC stays firm
In October 2017, the SC refused to entertain any urgent application by JAL, for modification of its September order that said that the holding company of distressed Jaypee Infratech should deposit Rs 2,000 crores in the apex court by October 27, 2017.
Meanwhile, more than 1,150 home buyers who had put their money in Jaypee Wish Town and Kosmos received the possession letters over the August-October period. By December 2017, it was speculated that another 2,300 homes may be ready for possession, if the work went on without hurdles. Jaypee had also said that it had plans to raise Rs 2,500 crores from the Yamuna Expressway project.
SC directs non-institutional directors to furnish personal details
The SC directed the non-institutional directors of JAL to appear in person and furnish details of their personal assets. The court had, on November 6, 2017, refused to allow the company to deposit Rs 400 crores with its registry, as against Rs 2,000 crores as directed earlier.
Jaypee home buyers seek flats over refund
At this juncture, mining giant Vedanta expressed interest in Jaypee Infratech. In a BSE filing, Vedanta Ltd said that it had ‘submitted a preliminary non-binding Expression of Interest, for submission of resolution plan of Jaypee Infratech Ltd, under the corporate insolvency process (CIRP)’. However, no negotiations took place at this stage.
The SC also appointed advocate Pawan Shree Agrawal as amicus curiae and ordered the setting up of a web portal, in order to enable the home buyers of the Jaypee Infratech to register their grievances. As per senior advocate Mukul Rohatgi and lawyer Anupam Lal Das, appearing for JAL, only 8% of home buyers had opted for refund of money, while 92% wanted their homes.
Jaypee insolvency case: 2018 recap
- May 16: SC stays liquidation proceedings against Jaypee.
- SC directs Jaypee Infratech to deposit Rs 1,000 crores by June 15, 2018.
- July 4: SC offers concession, Jaypee asked to deposit only Rs 600 crores.
- SC asks NCLT to expedite the case.
- JAL’s counsel Fali S Nariman says Rs 750 crores has been deposited, another Rs 600 crores to be deposited in seven instalments.
- Jaypee identifies assets to liquidate and refund home buyers’ money.
- Home buyers’ association demands early possession, quality construction, compensation for delay, no increase in super area and refund of car parking charges. The association also demands that JAL should not be allowed to control JIL.
- JAL rumoured to be in advanced stages of talks with ACC Limited, to sell the remainder of its cement business at a valuation of Rs 5,200 crores. Company declines to comment.
- Lakshadweep Pvt Ltd, a joint venture formed between Sudhir Valia-led Suraksha Asset Reconstruction Company and Mumbai-based Dosti Realty, emerged as the winner among bidders, with a bid of Rs 7,350 crores. Jaypee rejects Lakshadweep’s offer, on grounds of undervaluation. Two independent valuers had estimated Jaypee’s liquidation value between Rs 12,469 crores and Rs 14,798 crores.
- Jaypee offers to give 2,000 shares to each of its home buyers and proposes to bear 50% of stamp duty on first registration, as part of the offer. Also promises to deliver all units within 42 months.
- SC gives permission to two of the managing directors of the company to travel within a stipulated period of time, adding that if the Rs 100 crores is not submitted by May 10, the company runs the risk of losing the personal properties of the directors.
Jaypee Infratech case: 2019 recap
- April 19: Jaypee Group chairman Manoj Gaur seeks home buyers’ support, for resolving the crisis and delivering the pending 20,524 units. Proposes to infuse Rs 2,000 crores, to finish pending projects.
- State-owned NBCC and Suraksha Group in the race to acquire Jaypee Infratech. JAL also submits its plan but the same was not considered by lenders at this stage.
- May 14: The creditors’ panel of debt-laden Jaypee Infratech decides to vote on the revised offer of NBCC, as more than 20,000 home buyers favoured the voting process for the state-run firm’s bid, even as bankers dissented.
- June 3: Jaypee Sports International, a part of Jaiprakash Associates Limited, gets one month to clear its pending dues of Rs 220 crores, failing which it may have to give up its lease on a 1,000-hectare land along the Yamuna Expressway.
- November: SC says that revised resolution plans would be invited only from NBCC and Suraksha Realty.
- Almost 10% of Jaypee’s units, that is roughly around 2,500-3,000 units, have seen no takers so far.
- State-owned NBCC wins the approval of the financial creditors, to takeover debt-laden Jaypee Infratech Ltd, rekindling hopes that home buyers would finally get their promised flats over the next four years.
- SC sets 90-day deadline for completion of Jaypee insolvency process.
Jaypee case news updates
– PTI
Jaypee case: NCLAT gives conditional go-ahead to NBCC
The NCLAT has refused to stay the execution of the resolution plan submitted by NBCC, for the completion of 20,000 stalled units of the Jaypee Group
April 27, 2020: On April 22, 2020, the National Company Law Apellate Tribunal refused to stay the execution of the resolution plan that was submitted by the NBCC and allowed the interim resolution professional to consult the monitoring committee for execution of the plan and complete 20,000 stuck units. Resolution professional Anuj Jain has also been directed to constitute an interim monitoring committee that will comprise representatives of NBCC as well as its three major lenders which are the IDBI Bank, IIFCL and the LIC. The appellate tribunal also issued notices to ICICI Bank, IDBI Bank among others, directing them to file reply in two weeks and listed the matter for next hearing on May 15 . Note that no construction can take place now owing to restriction imposed on such activities due to COVID-19.
SC directs Jaipraksah Associates to return pledged land to Jaypee Infratech
The Supreme Court has restored a National Company Law Tribunal order that directed Jaiprakash Associates Ltd to return land that was pledged with several banks, to its debt-laden subsidiary Jaypee Infratech Ltd
February 27, 2020: The Supreme Court, on February 26, 2020, restored the National Company Law Tribunal (NCLT) order directing Jaiprakash Associates Ltd (JAL) to return 758 acres of land, which was pledged with several banks, to its debt-laden subsidiary firm Jaypee Infratech Ltd (JIL). The top court, while deciding a batch of appeals filed by the interim resolution professional of JIL and others, set aside the decision of the National Company Law Appellate Tribunal (NCLAT) passed on August 1, 2019.
The NCLAT had quashed the verdict of the NCLT, Allahabad, which on May 16, 2018 had held that the mortgage of properties of JIL, which was facing insolvency proceedings under the Insolvency and Bankruptcy Code (IBC), in favour of the lending financial institutions of holding firm JAL, cannot be countenanced. The NCLT had also held that the lenders of JAL do not fall in the category of the ‘financial creditors’ of corporate debtor JIL just because of the mortgage of JIL’s properties in favour of JAL. The Allahabad bench of the NCLT had asked the holding firm JAL to return 758 acres of land to its subsidiary JIL, declaring the transfer of the land as ‘fraudulent’ and ‘undervalued’.
An SC bench comprising justices AM Khanwilkar and Dinesh Maheshwari, in its judgement, considered various provisions of the IBC and reversed the verdict of the NCLAT. “The impugned order dated August 1, 2019 as passed by NCLAT in the batch of appeals is reversed and is set aside. Consequently, the order dated May 16, 2018 so passed by NCLT is upheld in regard to the findings that the transactions in question are preferential within the meaning of Section 43 of the Code,” justice Maheshwari, who wrote the judgement, said.
The banks, involved in the case, are: Axis Bank, Standard Chartered, ICICI Bank, SBI, Bank of Maharashtra, United Bank of India, Central Bank of India’, ‘UCO Bank’, ‘Karur Vysya Bank , L&T Infrastructure Finance Company, ‘Canara Bank, Karnataka Bank, IFCI, Allahabad Bank, Jammu & Kashmir Bank and The South Indian Bank Ltd.
Jaypee to lose F1 land, as YEIDA set to take possession
The Jaypee Group is set to lose the land on which India’s only F1 motor racing circuit is built, with the Yamuna Expressway Authority cancelling the lease of 1,000 hectares in Greater Noida
February 14, 2020: The Yamuna Expressway Authority has cancelled the allotment of 1,000 hectares of land to the Jaypee Group, on which India’s only Formula One (F1) motor racing circuit is built in Greater Noida over non-payment of dues, officials said, on February 13, 2020. The embattled business group, however, questioned the YEIDA’s cancellation-notice and said it will challenge it in court on the grounds that the lack of fulfilment of obligations on part of the Authority has come in the way of completing the project, where 90% obligations have been met by the company.
Jaypee loses 1,000-hectare land in Greater Noida that has F1 circuit
The Yamuna Expressway Authority has cancelled the allotment of 1,000 hectares of land to Jaypee Group, on which India’s only Formula One motor racing circuit is built in Greater Noida
December 23, 2019: The Yamuna Expressway Industrial Development Authority (YEIDA), during its 66th board meeting, on December 21, 2019, decided to cancel the land allotted to the Jaypee Group in Greater Noida, which has India’s only Formula One motor racing circuit. “A thousand hectares of land was allotted to Jaypee Sports Limited, an affiliate of Jaypee Group, in YEIDA’s special economic zone. Jaypee Sports Limited has been defaulting on payments to YEIDA and not completing projects promised to buyers,” YEIDA CEO Arunvir Singh said. The business group defaulted on payments of over Rs 500 crores, he added. The Jaypee Group had sub-leased plots to 11 builders on the allocated land and separately had taken around Rs 2,000 crores from home buyers in 10 projects but not delivered it, he said. “So, in light of the violation of lease deeds, it was decided during the board meeting that the land allotment be cancelled,” Singh said.
Senior vice-president, Jaypee Group, Ashok Kheda said, “We have paid Rs 2,400 crores for the land between 2009 and 2015. Rs 400 crores were remaining to be paid, on which the interest has now swollen to make total dues around Rs 700 crores of which three installments have been defaulted by us.” He said the Group has additionally invested Rs 2,000 crores on the Buddh International Racing circuit. “We will challenge the YEIDA’s decision to cancel land allotment in court now,” Kheda said.
NBCC gets approval to take over debt-ridden Jaypee Infratech
State-owned NBCC has won the approval of financial creditors, to take over debt-laden Jaypee Infratech Ltd, rekindling hopes of home buyers finally getting their promised flats over the next four years
December 18, 2019: After a week-long voting on the takeover proposals submitted by NBCC and Mumbai-based real estate firm Suraksha Realty for debt-laden Jaypee Infratech Ltd, the results have gone in favour of the state-owned firm, with an overwhelming majority of 97.36% favouring it. The successful resolution will provide a big relief to over 20,000 home buyers across various housing projects launched by Jaypee Infratech in Noida and Greater Noida (Uttar Pradesh). This 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. In its bid, NBCC has proposed to complete over 20,000 pending flats in the next three-and-a-half years. Home buyers’ claim amounting to Rs 13,364 crores and lenders’ claim worth Rs 9,783 crores have been admitted. NBCC also offered 1,526 acres of land to lenders, under a land-debt swap deal.
As many as 13 banks and over 21,000 home buyers have voting rights in the Committee of Creditors (CoC). Buyers have 57.66% voting rights, fixed deposit holders 0.13% and lenders 42.21%. For a bid to be approved, 66% votes are required. In a filing to the BSE, Jaypee Infratech’s interim resolution professional (IRP) Anuj Jain, informed that the NBCC got 57.66% vote of home buyers and 0.13% of fixed deposit holders. The public sector firm got 39.57% votes of lenders, out of total 42.21% votes. Suraksha managed to get 2.12% votes, as only fixed deposit holders and two lenders – Axis Bank and The Jammu and Kashmir Bank Ltd – favoured it. Out of 21,781 home buyers that are part of the CoC, as many as 12,147 flat owners voted on NBCC’s resolution plan, of which 97.02% were in favour. After the CoC approval, NBCC’s bid has to be approved by the National Company Law Tribunal (NCLT).
Jaypee crisis: SC directs completion of insolvency resolution process within 90 days
The Supreme Court has ordered the corporate insolvency resolution process of Jaypee Infratech Ltd to be completed within 90 days
November 6, 2019: In a jolt to the Jaypee Group, the Supreme Court, on November 6, 2019, directed completion of the corporate insolvency resolution process within 90 days, for Jaypee Infratech Ltd and said that the revised resolution plan will be invited only from NBCC and Suraksha Realty. The apex court said the pendency of any other application before the NCLT or NCLAT, including any interim direction, shall be no impediment for the IRP to receive and process the revised resolution plan from the two bidders.
A bench of justices AM Khanwilkar and Dinesh Maheshwari said it was passing directions in an ‘exceptional situation’, to do complete justice to home buyers, the Jaypee Group and banks concerned. “We direct the IRP to complete the CIRP within 90 days from today. In the first 45 days, it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively, which were the final bidders and had submitted resolution plan on earlier occasion and place the revised plan(s) before the Committee of Creditors (CoC), if so required, after negotiations and submit report to adjudicating authority NCLT within such time,” the bench said. “In the second phase of 45 days commencing from December 21, 2019, margin is provided for removing any difficulty and to pass appropriate orders thereon by the adjudicating authority,” the top court said.
SC reserves order on Jaypee’s plea against NCLAT verdict barring it from bidding for group firm
The SC has reserved its order on the Jaypee Group’s plea against the NCLAT verdict, which barred it from participating in the auction of Jaypee Infratech Ltd and will pronounce its order on November 6, 2019
October 24, 2019: The Supreme Court, on October 23, 2019, reserved the order on the Jaypee Group’s plea against the NCLAT verdict, which barred it from participating in the auction of its debt-ridden group firm, Jaypee Infratech Ltd (JIL). The bench has now fixed the matter for November 6, 2019, when it will pronounce its order on the plea of Jaypee Group.
The bench comprising justices AM Khanwilkar and Dinesh Maheshwari was told by senior advocate FS Nariman, appearing for the real estate firm, that around 12,000 flats or dwelling units had been delivered to the home buyers and of the total, around 6,000 have been given during the tough times of facing the insolvency proceedings. “Nobody said that we swallowed the money (of home buyers),” Nariman said.
In response to a query from the bench as to whether the firm would be able to get the statutory approval of 90% of the members of the Committee of Creditors (CoC) to bid for its ailing group firm, JIL, Nariman said that he cannot guarantee this. However, the proposal of the company does not contain any ‘hair cut’ and rather, it has offered sops to the home buyers. The counsel for the home buyers opposed the plea and said they have been waiting for the last 10 years and wanted their homes and the issue that whether they are built by the Jaypee Group or by the NBCC, was immaterial for them.
SC to hear Jaypee Group’s plea before taking up NBCC’s proposal on stalled housing projects
The SC has said that it will hear Jaypee Group’s appeal against an order that barred it from participating in the auction of its debt-ridden group firm, before dealing with NBCC’s proposal to complete the Group’s stalled projects
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October 18, 2019: The Supreme Court, on October 17, 2019, said it would first hear the appeal of Jaypee Group, against the NCLAT order that barred it from participating in the auction of its debt-ridden group firm, Jaypee Infratech Ltd (JIL). The bench, comprising justices AM Khanwilkar and Dinesh Maheshwari, said it would deal later with the revised proposal of state-owned NBCC, to complete the stalled projects of debt-laden Jaypee Group, to address the grievances of thousands of harassed home buyers. The bench has fixed October 22, 2019, as the next date for hearing the appeal of Jaypee Group, which was held ineligible by the National Company Law Appellate Tribunal (NCLAT) on July 30, 2019, to bid for its group firm JIL, which is facing insolvency proceedings.
The counsel for NBCC, in pursuance of an earlier order of the apex court, on October 17, 2019, submitted a revised plan in a sealed cover, on the issue of taking over the stalled housing projects of JIL, to ensure that hassled home buyers get their dream homes. The court, however, did not open the seal of the revised plan and told the National Buildings Construction Corporation Ltd (NBCC) that it would deal with it later.
NBCC offers to submit revised proposal for completing stalled Jaypee projects
Responding to the SC’s query on the matter, the NBCC has agreed to submit a revised proposal to complete the stalled projects of debt-laden Jaypee Group
September 6, 2019: State-owned NBCC has informed the Supreme Court that it is willing to give a revised proposal to complete the stalled projects of debt-laden Jaypee Group, to address the grievances of thousands of harassed homebuyers. The top court directed all stakeholders including homebuyers to make a representation to the NBCC within one week so that their concerns are taken note of in the revised plan.
A bench of Justices AM Khanwilkar and Dinesh Maheshwari gave three weeks to the National Buildings Construction Corporation Limited (NBCC) to submit the plan in a sealed cover and deferred the hearing on the matter for October 17, 2019.
The top court said that preparing of a revised plan by NBCC would not prejudice the rights and contentions of the parties and ordered status quo to continue on the insolvency proceedings. Additional Solicitor General Madhavi Divan, appearing for the centre said that the finance ministry will also assist the NBCC in drafting the plan.
SC seeks NBCC’s response on completing Jaypee Group’s stalled projects
The Supreme Court has sought a response from the NBCC, on whether it was willing to give a revised proposal to complete the stalled projects of Jaypee Group
September 3, 2019: A Supreme Court bench of justices AM Khanwilkar and Dinesh Maheshwari, on September 3, 2019, issued a notice to the National Buildings Construction Corporation Limited (NBCC) and sought its reply by September 5, on whether the company was willing to give a revised proposal for completing the stalled projects of Jaypee Group. Additional solicitor general Madhavi Divan, appearing for the centre, said the government has held three meetings with various stakeholders and a decision has been taken that it was willing to give tax concessions running into hundreds of crores to Jaypee Group and enhanced compensation to farmers, only if the NBCC was allowed to complete the stalled projects.
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Senior advocate FS Nariman and Anupam Lal Das, appearing for the Jaypee Group, said they had no objection if the NBCC was allowed to give a revised proposal but the Group should also be allowed to give a proposal, as it was willing to pay all dues to lenders and finish all stalled projects within three years. The bench said it would first look what NBCC had to offer and only then, it may look into Jaypee Group’s fresh proposal. The bench posted the matter for further hearing on September 5, 2019 and extended the status quo order till then.
Jaypee crisis: SC restricts fresh bidding for Jaypee Infratech, for 2 weeks
The SC has ordered a ‘status quo’ for two weeks, effectively restricting fresh bidding for debt-laden Jaypee Infratech, saying that it needs time to study the amendments to the Insolvency and Bankruptcy Code
August 2, 2019: The Supreme Court, on August 2, 2019, ordered status quo for two weeks, on Jaypee Group’s plea against the NCLAT order, which allowed fresh bidding for debt-laden Jaypee Infratech. A bench of justices AM Khanwilkar and Dinesh Maheshwari ordered the status quo, after the apex court was informed that Parliament had passed the proposed amendments in the Insolvency and Bankruptcy Code. “We have not seen the amendment, let it come and we will see,” the bench said.
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On July 30, 2019, the National Company Law Appellate Tribunal (NCLAT) had allowed fresh bidding for the cash-strapped Jaypee Infratech but barred its promoter Jaypee Group from participating in the auction. The Lok Sabha, on August 1, 2019, passed amendments to the Insolvency and Bankruptcy Code, with the government asserting that the spirit behind the law, was not to allow companies to die. The Rajya Sabha had already passed the bill and with its passage in the lower house, the Insolvency and Bankruptcy Code was set to be amended.
SC to hear plea next week on preventing Jaypee Infratech’s liquidation
The Supreme Court has agreed to hear a plea filed by a home buyer, who has sought a forensic audit of Jaypee Infratech Ltd and has asked that the company not be sent into liquidation
July 3, 2019: The Supreme Court will hear, in the second week of July 2019, a plea seeking that Jaypee Infratech Ltd not be sent into liquidation, although the deadline for the corporate insolvency resolution process was over, as it would cause ‘irreparable loss’ to thousands of home buyers. The apex court had, on August 9, 2018, ordered re-commencement of the resolution process against JIL and barred the firm, its holding company and promoters from participating in the fresh bidding process. It had also allowed the Reserve Bank of India to direct banks to initiate corporate insolvency resolution proceedings (CIRP) against Jaiprakash Associates Ltd (JAL), the holding company of JIL, under the Insolvency and Bankruptcy Code (IBC).
However, a fresh application in the matter came up for hearing on July 2, 2019, before a bench comprising justices AM Khanwilkar and Dinesh Maheshwari. The plea, filed by one of the home buyers through advocate Ashwarya Sinha, sought direction that an ‘independent and thorough forensic audit’ of JIL should be conducted, from the date of its incorporation. Referring to the apex court’s 2018 order, the plea said, “The court had made a conscious effort to avoid liquidation of Jaypee Infratech Limited. However, the events as have unfolded subsequent to the passing of the judgment have frustrated the efforts as made by the court.”
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As per the apex court’s direction, the 270 days for completion of CIRP have concluded on May 6, 2019, it said. “Till date only two serious bids have been received by the committee of creditors. One bid has been submitted by National Buildings Construction Corporation Limited, whereas the other has been submitted by Suraksha ARC. None of the said bids have been accepted by the committee of creditors till date,” the plea said, claiming that the threat of JIL going into liquidation was ‘turning into a reality with each passing day’.
“Liquidation of the company will only be in the interest of the banks, who will be able to recover the money lent by them to the corporate debtor,” it said, adding, “However, the ultimate sufferers of the same will be the home buyers.” Seeking forensic audit of JIL, the plea alleged that ‘diversion of funds in the present case is on an even larger scale than that of projects developed by Amrapali Group of Companies’. “However, without a forensic audit, none of the persons responsible for the said diversion will ever be made accountable. Furthermore, it will be impossible to bring back the hard earned monies of the home buyers, without the said diversion being traced to the ultimate beneficiary,” it said.
Jaypee home buyers stage protest at Jantar Mantar, seek Modi’s intervention
Hundreds of home buyers of the crisis-hit Jaypee Group, who have not received possession of their flats, carried out a protest, with an attempt to draw the attention of the central government
June 24, 2019: Aggrieved home buyers of the Jaypee Group, who have not received possession of their flats, gathered at Jantar Mantar in the heart of the national capital, at around 10 am on June 23, 2019, for a silent protest. Several of them held placards and posters critical of Jaypee Group’s Manoj Gaur and raised slogans against him and the banks involved. The buyers also said they wanted to meet union housing and urban affairs minister Hardeep Singh Puri with their problems but could not do so. “If (prime minister Narendra) Modi wants it (resolution of the issue), he can get it done,” said Gaurav Pal, a home buyer in Jaypee Wishtown, Noida.
He claimed that a section of buyers were in favour of the state-run NBCC’s bid for completing the pending projects of Jaypee but IDBI Bank had voted against it, pushing the company towards liquidation. “For the matter to be resolved, both, the bank, as well as home buyers, have to be on the same page. We are at loggerheads. Buyers no longer have trust in Jaypee but can take chances with NBCC, as it is a PSU,” Pal said. He claimed that the insolvency resolution professional, Anuj Jain, who was brought in two years ago to find a way out of this conflict too, had not been able to come up with a solution.
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Home buyer Gautam Rastogi, who reached Jantar Mantar from Noida, sought the government’s intervention in the matter and expressed hope that the banks would suspend the EMIs they are charging on home loans. “If the government wants, it can get this matter resolved. We have been protesting for long now. We have approached the UP chief minister, the prime minister and today, tried to reach out to Hardeep Singh Puri, the minister for housing and urban affairs, with our request for bringing our woes to an end. So far, our prayers have fallen on deaf ears,” Rastogi lamented. “Most of the aggrieved home buyers are service-class people. We have not got our flats handed over and several are living in rented accommodations. The banks can at least suspend the EMIs they are charging on home loans, till the time we get possession of our homes,” he added.
The buyers also wondered why there had been no forensic audit of the company, which has been accused of diverting funds into various projects. Jaypee Infratech had to deliver 32,691 units to its customers under various housing projects in Noida, of which 4,889 units were completed before the start of insolvency proceedings. As many as 27,802 units were left to be completed by August 2017. During the bankruptcy process, 7,278 units have been completed, leaving 20,524 units to be delivered, as on March 31, 2019.
In October 2018, the insolvency resolution professional started a fresh initiative, to revive Jaypee Infratech on the NCLT’s direction. This was the second round of bidding process to revive Jaypee Infratech, which went into insolvency in August 2017, after the National Company Law Tribunal (NCLT) admitted an application filed by an IDBI Bank-led consortium.
Jaypee Sports has 1 month to clear dues or may lose Yamuna Expressway land
Jaypee Sports International, a part of Jaiprakash Associates Limited, has one month to clear its pending dues of Rs 220 crores, failing which it may have to give up its lease on a 1,000-hectare land along the Yamuna Expressway
June 3, 2019: Jaypee Sports International has one month to clear its pending dues of Rs 220 crores, or their lease on a 1,000-hectare land along the Yamuna Expressway will be cancelled, the Yamuna Expressway Industrial Development Authority (YEIDA) said. The details were shared on May 30, 2019, by YEIDA chief executive officer Arun Vir Singh, after the 65th board meeting of the Authority, which was formed by the Uttar Pradesh government for development in the region along the 165-km-long Yamuna Expressway.
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He said Jaypee Sports International, the owners of the Buddha International Circuit, were allotted the land for a special development zone (SDZ) in 2009-10 in Sector 25, along the Yamuna Expressway. “The group has not cleared pending dues for the land allotted/leased for the SDZ, not paid even the first instalment after re-schedulement, despite multiple defaulter notices. It has defaulted two instalments of Rs 1,082,547,095 (due on September 30, 2018) and Rs 1,042,258,611 (due on March 30, 2019),” Singh said. “Now it has been given a time of one month to clear, as per provisions of rules related to cancellation of lease/allotment, to clear the first default in instalment and also asked to open an escrow account in which it has to put 20% of the money earned through other allottees, in payment towards the Authority,” he said.
The officer said the group, a part of Jaiprakash Associates Limited, has further sub-let half of the land to nearly 30 smaller developers, who have their projects underway in the region. “If the group fails to clear the dues in one month, the board has authorised the YEIDA to cancel its lease for the SDZ land,” Singh added.
The board, he said, has also approved a proposal of the YEIDA, for a ‘nominal rise’ in rates of the land which have not been revised since 2015. “Rates for residential plots up to 200 sq metres have been increased by 8% and more than 200 sq metres by 6%. The rates for group housing/builder plots will be up by 6%, and institutional and industrial plots will be up by 4%. Land rates for plots for IT and ITES will be up by 6% and besides all this, land rates under any other scheme will be up by 6%,” Singh said. At present, residential land costs at a rate of Rs 15,620 per sq metre, group housing/builder land at Rs 16,225 per sq metre, while for institutional land up to 4,000 sq metre the rate is Rs 7,569 per sq metre and for industrial it is Rs 6,405 per sq metre, according to YEIDA officials.
Jaypee crisis: NCLAT refuses to stay creditors’ vote on NBCC’s revised bid
The NCLAT has rejected bankers’ bid to halt the voting process of the creditors’ panel of Jaypee Infratech, on a revised offer of the NBCC
May 15, 2019: The creditors’ panel of debt-laden Jaypee Infratech, on May 14, 2019, decided to vote on the revised offer of NBCC, as more than 20,000 home buyers favoured the voting process for the state-run firm’s bid, even as bankers dissented, sources said. The voting process would start on Thursday (May 16, 2019) and end on Sunday (May 19, 2019), sources said, adding that the results would be declared on May 20.
Bankers who participated in the Committee of Creditors (CoC) meet on May 14, opposed putting the NBCC’s bid to vote and pitched for further negotiations. Soon after the CoC decided to put to vote the NBCC’s bid, banks made a plea before the National Company Law Appellate Tribunal, for a stay on the voting process. However, the NCLAT refused to stay voting by the creditors.
A two-member NCLAT bench, headed by chairman justice SJ Mukhopadhaya, warned banks that they would get ‘zero rupees’, if the process is stalled. Justice Mukhopadhaya said the interest of thousands of home buyers was of prime importance and the matter needed to be resolved, even if there is just one bidder. During the CoC meeting, bankers also proposed that they would take control of Jaypee Infratech and rope in NBCC as a project management consultant (PMC) to complete over 20,000 delayed flats, sources said. The opposition to the revised bid also comes against the backdrop of NBCC, on May 13, 2019, ruling out dilution of certain conditions, including exemption from tax liability, in its revised offer.
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However, sources said home buyers struck a different note. Kuldeep Verma, who represents home buyers in the CoC, wanted the NBCC’s offer to be put to vote, without any delay. He also informed the committee that thousands of home buyers have intimated him that they are in favour of voting on the revised bid, sources added. According to the sources, Verma’s views prevailed as home buyers have nearly 60% voting rights in the CoC but bankers expressed their dissent. A minimum 66% vote of financial creditors (bankers and home buyers) is required, for the approval of any resolution plan.
Jaypee Infratech’s interim resolution professional (IRP) Anuj Jain too favoured voting process for the revised offer. A majority of the home buyers are likely to vote in favour of NBCC’s bid but many also fear that lenders may reject it and opt for liquidation, as they do not want to take up to 60% hair-cut against their claim of Rs 9,782 crores, sources said. The CoC is considering NBCC’s revised offer, after it rejected Mumbai-based Suraksha Realty’s bid on May 3, through a voting process.
Earlier, the creditors’ panel did not allow a vote on NBCC’s bid, citing lack of approvals from the government departments. NBCC later got all the necessary clearances. In its revised offer, NBCC has proposed the infusion of Rs 200 crores equity capital, transfer of 950 acres of land worth Rs 5,000 crores to banks and completing construction of flats by July 2023 to settle an outstanding claim of Rs 23,723 crores of financial creditors. Last week, lenders had written to NBCC, seeking clarifications on certain relief and concessions put forward by the public sector firm in its resolution plan. However, the NBCC decided not to dilute the conditions of exemption from income tax liability, as well as from taking consent of development authorities for transfer of businesses.
Clarifications from the NBCC were sought, in the wake of the IRP flagging to the lenders that NBCC’s bid was conditional and non-binding. Jain had written to the CoC that NBCC’s revised bid was conditional, as the plan would not be binding unless key relief measures such as extinguishing of income tax liability and exemption from seeking consent of YEIDA (Yamuna Expressway Industrial Development Authority) for any business transfer. The court-mandated deadline for completing the resolution plan for Japyee Infratech ended on May 6, 2019 and the CoC has sought an extension of the deadline. Apart from NBCC, Adani Group has shown interest to bid for Jaypee Infratech but creditors have not sought a resolution plan from Adani so far. Jaypee Group’s promoters too have put in a bid, under Section 12A of the Insolvency and Bankruptcy Code, to retain control of the company.
Jaypee Group proposes to infuse Rs 2,000 crores, to finish pending projects
In a fresh attempt to retain control over its realty arm Jaypee Infratech, crisis-hit Jaypee Group’s promoters have promised to infuse Rs 2,000 crores, to complete pending apartments over the next four years
April 22, 2019: At a meeting called by Jaypee Group chairman Manoj Gaur with home buyers, on April 19, 2019, as part of efforts to seek flat owners’ support for resolving the crisis and delivering the pending 20,524 units, the company’s promoters apologised to the distressed home buyers and proposed to infuse Rs 2,000 crores, to complete pending apartments. Jaypee Group founder Jaiprakash Gaur was also present at the meeting, which was attended by over 1,000 buyers, while around a dozen flat owners boycotted the meet and staged protest at the venue – Jaypee Institute of Information Technology, in Noida.
Jaypee Infratech, a subsidiary of the Jaypee Group’ flagship firm Jaiprakash Associates Ltd (JAL), is undergoing insolvency proceedings. State-owned NBCC and Suraksha Group are in the race to acquire Jaypee Infratech. JAL has also submitted its plan but the same is not being considered by lenders at this stage. To solicit the support of its home buyers, who have voting rights for approval of any resolution plan under Insolvency and Bankruptcy Code, the Jaypee Group chairman invited the flat owners to discuss the proposal submitted by it.
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Manoj Gaur, while apologising for the delay in completing the housing projects, said the delay ‘was beyond his control’. “We are victims of circumstances,” he said. Promising to complete and hand over the remaining units, Gaur sought another chance from the home buyers. “We will put Rs 1,500 crores in an escrow account and keep a 100-acre land worth Rs 500 crores earmarked, won’t sell this land. In total we have around Rs 2,000 crores for this,” Jaypee Group’s advisor, Ajeet Kumar said. Additional funds would come from home buyers, as well as the sale of unsold housing units worth Rs 4,000 crores, he added.
“Under Section 12A of the IBC Procedure, we have submitted a proposal (to lenders) in the month of February. The highlights of the proposal are that we will put Rs 1,500 crores in an escrow account which will be monitored by a committee and the entire amount will be used for construction and completion of the houses,” he said. The Jaypee Group had, in April 2018 submitted a Rs 10,000-crore plan before its lenders, to revive Jaypee Infratech, but the same was not accepted. Asked if Jaypee’s proposal was aimed at stalling the bids made by NBCC and Suraksha, Kumar said this was not the intention of the Group. “We have also made a proposal and people will decide. If they find the other two bids more favourable, they can accept that and we won’t have any objection,” he said.
Flat owners had a mixed response to the Group’s proposal, with some terming it as a lie and fraud, while others were ready to give another chance to the company. “I still feel, if they are still given a chance, they will complete it expeditiously. However, the quality of their work is a concern,” a buyer, PK Arora, aged 79, said. Buyers said other contenders NBCC and Suraksha had promised delivery of projects in five and four years, respectively. The NBCC has assured interest on delay in 25% cases, Suraksha on none, but Jaypee Group on all projects. “We will be satisfied, only when we get our homes. This assurance, today, is a hope at least,” said another home buyer, Vipul Kumar. Gaurav Vishnoi, also a flat buyer, however, said: “It’s all lies and fraud. He is just buying time for himself. The Group been doing it for years now. We have been protesting for four years now. They just speak during meetings but they don’t walk their talk.” Jaypee Infratech had to deliver 32,691 units, of which 4,889 units were completed before the start of insolvency proceedings. As many as 7,278 more units have been completed in the last 18 months, while 20,524 units are yet to be delivered.
SC asks Allahabad NCLT to deal with insolvency proceedings against Jaypee Group
The SC has asked the National Company Law Tribunal, Allahabad, to deal with the insolvency proceedings against Jaypee Infratech Ltd and barred the Group or its promoters from participating in any fresh bidding process
August 9, 2018: In a setback to the Jaypee Group, a Supreme Court bench headed by chief justice Dipak Misra, on August 9, 2018, set a limitation period of 180 days, to conclude the insolvency proceedings against Jaypee Infratech Ltd (JIL). The bench, also comprising justices AM Khanwilkar and DY Chandrachud, said the Rs 750 crores deposited by JIL in the apex court, shall be transferred to the National Company Law Tribunal (NCLT), Allahabad, which would deal with the proceedings.
The top court also allowed the Reserve Bank of India (RBI), to direct the banks to initiate separate insolvency proceedings against JIL’s holding company, Jaiprakash Associate Limited (JAL). The bench said home buyers should be included in the committee of creditors, in accordance with the amendments made in the Insolvency and Bankruptcy Code (IBC). The bench disposed of all the petitions and applications pending before it.
[ecis2016.org] Banks oppose refund of Jaiprakash Associates’ money to home buyers
The apex court had earlier reserved its order on ‘interim reliefs’ sought by various stakeholders, including the home buyers of JIL, JAL, banks and financial institutions and the insolvency resolution professional (IRP). IDBI Bank had moved the Corporate Insolvency Resolution application before the NCLT, against the debt-ridden realty firm, JIL, after it allegedly defaulted in paying back a loan of Rs 526 crores.
The ASG had earlier said that, according to the amended IBC, now, home buyers are financial creditors in a firm. Hence, the committee of creditors, which usually included banks and FIs, will have to consider the views of home buyers, while deciding the resolution plan of a company. Lawyers, representing the home buyers, opposed the submission that JAL be allowed to complete the housing projects, saying that it was barred under the law to do so. Taking note of the enormity of the situation, the bench said it was thought that the liability of the firm was to the tune Rs 2,000 crores and it has now gone beyond Rs 30,000 crores.
Earlier, JAL had said it would deposit Rs 600 crores more, to refund the home buyers, if it was allowed to dispose of its identified assets, including a cement plant at Rewa in Madhya Pradesh. JAL had said Rs 750 crores had been deposited by it with the apex court’s registry and Rs 600 crores more would be required, for paying the principal sum to the home buyers. The home buyers had moved the apex court, stating that around 32,000 people had booked flats and were now paying instalments.
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