The National Company Law Appellate Tribunal (NCLAT) on July 30 allowed extension of the corporate insolvency resolution process of the embattled realty firm Jaypee Infratech by 90 days, clearing the decks for the resolution professional to call for fresh bids.
The two-member bench headed by Chairman Justice SJ Mukhopadhaya allowed for a fresh expression of interest from bidders and directed the resolution professional (RP) and the Committee of Creditors (CoC) of the company to complete the entire process of selecting new bidders within 45 days.
The appellate tribunal rejected the plea of Jaiprakash Associates, the parent company of Jaypee Infratech, to submit a bid as it is not eligible under Section 29A of the IBC. It, however, permitted the government’s construction arm NBCC, whose bid was rejected by the CoC of Jaypee Infratech, to submit a fresh resolution plan.
As many as 13 banks and over 23,000 homebuyers have voting rights in the CoC.
This will be the third time that bids are being invited in the Jaypee Infratech matter where over 23,000 homebuyers have been waiting to get possession of their homes for almost a decade.
Lenders of the embattled firm had requested that the 250-day period from September 17, 2018, to June 4, 2019, be excluded from the stipulated period for Corporate Insolvency Resolution Process (CIRP), as the National Company Law Tribunal (NCLT) had used this time to decide on the issue of voting rights of homebuyers.
During the NCLAT proceedings on July 22, JAL had offered to pay 100 per cent outstanding amount to the creditors without any haircut. It had also offered to complete the construction of the remaining flats within three years and hand it over to the original allottees.
On July 17, NCLAT made it clear that the resolution applicant will have to ensure that the interests of Jaypee homebuyers are protected at all costs and directed banks to submit the terms and conditions for fresh bidders in the resolution process of the embattled firm.
“Counsel appearing for lenders are allowed to file new terms and conditions in case fresh bidding takes place,” the bench had said.
The apex court had on August 9, 2018, ordered re-commencement of the resolution process against JIL and allowed the Reserve Bank of India to direct banks to initiate corporate insolvency resolution proceedings (CIRP) against Jaiprakash Associates (JAL), the holding company of JIL, under the Insolvency and Bankruptcy Code (IBC).
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.
In the second round of bidding, the CoC had first rejected the resolution plan of Suraksha Realty and then voted against state-owned NBCC’s offer.
In its revised offer, NBCC had proposed infusion of Rs 200 crore equity capital, 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 IRP Anuj Jain flagging to the lenders that the state-owned firm’s bid was conditional and non-binding because of the two conditions.