BQ: NBCC, Suraksha Bid To Acquire Bankruptcy-Bound Jaypee Infratech

15 February 2019: State-owned NBCC (India) Ltd. and Mumbai-based Suraksha Group have submitted bids to take over bankruptcy-bound Jaypee Infratech and complete stalled housing projects in Noida, sources said. The value of the bids could not be immediately ascertained. NBCC Chairman and Managing Director Anoop Kumar Mittal said the company is “keen to acquire” Jaypee Infratech and complete over 20,000 pending housing units.

Mittal declined to share the bid value but said the resolution plan submitted by the company is beneficial for all stakeholders, including banks, homebuyers and NBCC.

NBCC, in an exchange filing, said it has submitted the bid to interim resolution professional Anuj Jain.

Jain, who is carrying out the insolvency process, had earlier shortlisted four players— NBCC, Kotak Investment, Singapore-based Cube Highways and Suraksha Group—to submit their resolution plans by Feb. 15.

Kotak Investment and Cube Highways have not submitted bids, sources said.

A meeting of the committee of creditors will be held on Feb. 18 to discuss bids.

In October 2018, Jain started a fresh initiative to revive Jaypee Infratech on the National Company Law Tribunal’s direction after lenders rejected the over Rs 7,000-crore bid of Suraksha Group.

He invited companies and investors to submit resolution plans to revive Jaypee Infratech, which has many stuck housing projects in Noida and Greater Noida.

In 2017, the National Company Law Tribunal had admitted the application by an IDBI Bank-led consortium seeking resolution for Jaypee Infratech under the Insolvency and Bankruptcy Code. The tribunal had appointed Jain as interim resolution professional to manage the company’s business and invite bids from investors.

Consequently, Lakshdeep, part of Suraksha group, had emerged as the front runner to acquire the firm. However, in May last year, lenders rejected the Rs 7,350-crore bid by Lakshdeep as they found the amount to be inadequate.

The realty firm has an outstanding debt of nearly Rs 9,800 crore, of which Rs 4,334 crore pertains to IDBI. 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, a subsidiary of Jaypee Group’s flagship firm Jaiprakash Associates, is developing about 32,000 flats, of which it has delivered 9,500 units. J

aiprakash Associates had submitted Rs 750 crore in the registry of the Supreme Court for refund to buyers. However, this amount has now been transferred to the NCLT as per an order of the apex court.

Bloomberg Quint reported

EOI: NCLT Sterling order may cheer lenders

15 February 2019: There’s a ray of hope for lenders who are unable to sell properties of errant borrowers with the Enforcement Directorate(ED) having attached the assets by invoking the harsh anti-money laundering law. 

In a case involving Sterling SEZ and Infrastructure Ltd, whose promoters have left India, the National Company Law Tribunal has ruled that the attachment order obtained by ED is invalid and the resolution professional can step in to take charge of the properties and deal with them under the Insolvency and Bankruptcy Code (IBC). 

Sterling SEZ is part of the Vadodara-based Sterling Biotech (SBL) group, and according to court papers, total credit facilities of Rs 8,100 crore availed by the group were declared “fraud account” by banks. 

Srei Infra Finance, one of the creditors to Sterling SEZ, had sought NCLT’s intervention for lifting the attachment by ED which felt that IBC 2016 being a civil law cannot be given precedence over Prevention of Money Laundering Act (PMLA), 2002, and therefore, NCLT lacks jurisdiction. 

However, the tribunal directed the ED to release the attachment on the ground that IBC is a later legislation and the time-consuming proceedings under PMLA could cause an erosion in the value of the attached assets. 

“It’s a significant order and is likely to be challenged in higher courts. The ruling provides the ground to other lenders to move court to lift the attachment by ED or other government agencies,” said MR Umarji, former RBI executive director and a member of the Bankruptcy Law Reforms Committee. 

Sapan Gupta, partner with Shardul Amarchand Mangaldas, said, “The ruling upholds the right of secured lenders as there are specific securities offered for obtaining loans. Once ED completes its process, the securities should be released to secured lenders.” 

The ED’s contention was that as per the decision of the special court under PMLA if an asset is proceed of crime, it erodes the very title of the corporate debtor and the resolution applicant. 

The agency had told the court that the “promoters of SBL group left the country under suspicious circumstances and evaded the process of law to face criminal prosecution”. 

According to a PTI report on Thursday, two of the main promoters of SBL, Nitin Jayantilal Sandesara and Chetankumar Jayantilal Sandesara, along with Dipti Chetan Sandesara moved a Delhi court seeking cancellation of non-bailable warrants issued against them. 

However, the Mumbai bench of the NCLT observed the purpose and object of IBC is resolution for the corporate debtor by maximising the value that can be received by creditors and stakeholders. “The PMLA’s object is also to recover the property from wrongdoers and compensate the affected parties by confiscation and sale of assets of the wrongdoer apart from imposing punishment. Here the beneficiaries are the creditors of the corporate debtor,” said the court. 

In high-profile and politically sensitive cases lenders, particularly state-owned banks, often refrain from challenging asset attachment by government agencies. “Some of the lenders to Nirav Modi and Vijay Mallya whose movable and immovable assets have been attached by agencies can explore legal option,” said a banker.

The Economic Times reported

BS: NCLAT quashes NCLT order against ECL

14 February 2019: The National Company Law Appellate Tribunal (NCLAT) has set aside the National Company Law Tribunal (NCLT) Kolkata bench’s order to start insolvency proceedings against Eastern Coalfields (ECL), a subsidiary of Coal India, said an official on Thursday.

The state-run miner had moved the NCLAT challenging the order. 

“The NCLAT has set aside the NCLT order and it has released us from all the rigour of law. We are allowed to function independently through our board,” an ECL official told IANS. 

THe NCLT’s city bench, in December, admitted an insolvency petition, filed by the Gulf Oil Lubricants India, against ECL under Section 9 of the Insolvency & Bankruptcy Code, as it allegedly refused to pay the interest amount at the rate of 18 per cent on the original debt to the operational creditor.

ECL had already paid the Rs 84.71 lakh principal sum to the creditor.

At the hearing, the counsel appearing for the operational creditor, accepted that the principal was paid prior to the admission of the insolvency application.

“That the parties have settled the matter prior to the constitution of the committee of creditors and the adjudicating authority has failed to notice that the principal has been paid and original plea of the corporate debtor was that no interest was payable in terms of the agreement/contract, we set aside the impugned order dated December 19, 2018 passed by the adjudicating authority,” the NCLAT bench said.


The Business Standard reported