TOI: Jaypee buyers want to be in monitoring committee

7 June 2020: Despite a growing clamour for fast takeover the of debt-ridden Jaypee Infratech, state-run NBCC has said that it will wait for a clear direction from the National Company Law Appellate Tribunal (NCLAT) to start construction activity at the stalled Wish Town project.

Meanwhile, a homebuyers’ association has appealed to the NCLAT to be made a party in the interim monitoring committee that will look into the day-to-day affairs of the builder company.

“There has been a mismatch in the financial responsibility we have taken for the completion of Wish Town and what NCLT has actually awarded us. Unless the NCLAT settles it in our favour, we will not initiate any takeover bid,” VK Chaudhary, chief general manager of NBCC told TOI.

“Construction work at the Wish Town project is in progress and a monitoring committee is present, but NBCC will not get involved without a 100% clarity from the court,” he added.

Of 35,000 Wish Town flats, Jaypee Infratech claims that just 19,000 flats are left to be constructed.

Surprisingly, JIL completed 10,000 flats during the insolvency resolution period from 2017-2019. JIL’s day-to-day operation is now supervised by a monitoring company, which includes former interim resolution professional Anuj Jain and NBCC officials.

However, the Wishtown Welfare Society with a membership of 1,248 homebuyers has appealed to the NCLAT for its inclusion in the monitoring committee. “In our appeal, we have pointed out that the monitoring committee that will implement the resolution plan has no homebuyer representative,” said Raunak Jain, the legal counsel for the homebuyers.

Commenting on the absence of homebuyers from the monitoring committee, former interim resolution professional Anuj Jain said, “The investors in the project can only be part of the panel if the NCLAT gives its nod to the same.”

Source: The Times of India

BS: Rs 750 cr paid by JAL was towards obligation of Jaypee Infratech: NCLT

6 March 2020: The NCLT Delhi bench on Tuesday approved the bid of state-owned NBCC to acquire debt-laden JIL through an insolvency process and complete around 20,000 pending flats over the next three and half years

The Rs 750-crore deposited by Jaypee Infratech’s (JIL) parent firm Jaiprakash Associates with the Supreme Court registry was a payment towards obligation of the debt-ridden firm and should be treated as the asset of the corporate debtor, the NCLT has observed while approving the bid of NBCC for JIL.

The NCLT Delhi bench on Tuesday approved the bid of state-owned NBCC to acquire debt-laden JIL through an insolvency process and complete around 20,000 pending flats over the next three and half years.

The court also ordered that the Rs 750 crore deposited by Jaypee Infratech’s parent firm Jaiprakash Associates Ltd (JAL) with the registry of the Supreme Court would be part of the resolution plan.

In the written order uploaded on its website on Thursday, the NCLT said that as JAL is not under further obligation to complete construction of homes, and it cannot be assumed that if this money returned then it would be utilised to settle the debt of creditors of Jaypee Infratech Ltd (JIL).

“Since JAL is not under further obligation to complete construction of homes, there is no occasion to assume that if this money go back to JAL, it would be utilised for the cause of the creditors of the corporate debtor, in view of thereof, we hereby dispose all CAs related to Rs 750 crore issue by holding that this money is to be treated as the asset of the corporate debtor,” the NCLT order said.

“Though it has not been explicitly explained that JAL paid on behalf of JIL, the matter pending before the Supreme Court being with regard to homebuyers of JIL, when money was asked to be deposited towards refund of JIL homebuyers and the same being paid by JAL, now it is not open to JAL to say that it is JAL’s money,” it said.

NCLT also rejected the submissions that Rs 750 crore has not gone into the books of JIL, therefore it cannot be treated as the assets of JIL.

“Since JAL has without any objection or condition paid to the home buyers of JIL on behalf of JIL, it has to be treated that the payments is towards the obligation of JIL,” said NCLT in its 115-page-long order.

According to NCLT, In this case, the homebuyer’s money has been lying with the corporate debtor and JAL, it is the admitted fact that money come from the homebuyers has gone to JAL in the name of construction.

“It is not the case of the JAL that JIL money has not come for construction. Moreover JAL, by the time it has desposited, was aware that it was depoisting that money towards the obligation owned to JIL homebuyers,” the order saod.

“Here there could not be any assumption or presumption to say that JAL depoisted this money before the Supreme Court with an assumption that it would come back to it in the event this money has not been utilised for the distribution of it to the homebuyers of JIL,” it said.

“As long as the Supreme Court has not stated that this money has to be returned to JAL, it has to be construed that Supreme Court has conciously retained the money within the custody of it and thereafter transferred this money to NCLT with a direction that the parties shall abide by the directions of NCLT,” said NCLT adding ” Had the Supreme Court has felt that it should go back to JAL, the Supreme Court would have returned it to JAL, but but has not been done.”

NCLT further said: “Whenever any payment is made towards any liability, it has to be treated as a payment made towards that liability. It does not matter who paid the money, it matters as whether it has been paid towards an obligation or not.”

Jaypee Infratech went into insolvency process in August 2017 after the NCLT admitted an application by an IDBI Bank-led consortium.

NBCC’s proposal was approved by the lenders in the third round of bidding process to find a buyer for Jaypee Infratech.

In its bid, NBCC had proposed to complete over 20,000 pending flats in housing projects launched by Jaypee Infratech in Noida and Greater Noida (Uttar Pradesh).

Homebuyers’ claim amounting to Rs 13,364 crore and lenders’ claim worth Rs 9,783 crore were admitted.

NBCC offered 1,526 acres of land to lenders under a land-debt swap deal.

Source : Business Standard

FE: Jaypee Infratech case: NBCC offers in SC to prepare revised plan for taking over stalled projects

5 September 2019: State-owned NBCC told the Supreme Court Thursday that it was 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 representation to NBCC within one week so that their concerns are taken note of in the revised plan.

A bench of Justices A M Khanwilkar and Dinesh Maheshwari gave three weeks to National Buildings Construction Corporation Limited (NBCC) to submit the plan before it in a sealed cover and deferred the hearing on the matter for four weeks.

“The NBCC (India) Limited after finalization of the revised plan may have to place it before the appropriate authority for its due consideration. That may require at least three weeks time. We accede to this request. The salient features of the proposed revised plan so finalized be produced in a sealed cover to the Court for its perusal on the next date of hearing,” the bench said and listed the matter on October 17.

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 NBCC in drafting the plan.

On September 3, the apex court had sought to know from NBCC whether it was willing to give a revised proposal to complete the stalled projects of cash-strapped Jaypee group even as the Centre said it has to step in because “a mess has been created by the promoter”.

The top court had said if NBCC, which saw two of its proposals rejected earlier by lenders of the defaulting Jaypee group, is not willing to submit a revised plan, then it may look for other alternatives. Divan had said that the government held three meetings with various stakeholders and a decision has been taken that it was willing to give tax concession running into hundreds of crores to Jaypee group and enhanced compensation to farmers only if the NBCC is brought into picture and allowed to complete the stalled projects. She had said that court should ask NBCC to submit a revised proposal within three weeks as the Centre does not want any third party to be involved in this case.

Jaypee group on other hand had contended that the new amendments would not apply in this case and till now NBCC has submitted two proposals but it was voted out by the lenders. The cash strapped company had further said that it may not have any objection if the NBCC is allowed to give a revised proposal, but Jaypee Group should also be allowed to give a fresh proposal as it is wiling to pay all its dues to lenders and finish all the stalled projects within a period of three years.

On August 22, the top court had ordered status quo for a week on the insolvency proceeding after Jaypee Group challenged the July 30 order of the National Company Law Appellate Tribunal (NCLAT), which allowed the fresh bidding for the cash-strapped Jaypee Infratech.

On July 30, the NCLAT had allowed fresh bidding for the cash-strapped Jaypee Infratech but barred its promoter Jaypee Group from participating in the auction. To enable the fresh bidding process, the NCLAT extended the resolution period of Jaypee Infratech for another 90 days, which includes a 45-day window for the resolution professional (RP) and lenders of the debt-ridden firm to invite fresh bids.

The NCLAT direction came in view of lenders rejecting the resolution plan of state-owned NBCC and Suraksha Realty in the second round of bidding. Jaypee Infratech went into insolvency in August 2017 after the National Company Law Tribunal (NCLT) admitted an application filed by an IDBI Bank-led consortium.

In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. The NCLAT had asked state-owned NBCC, whose bid was rejected by the CoC of Jaypee Infratech, to submit fresh resolution plan for the debt-ridden company.

The Financial Express reported

FE: Jaypee infra parent moves SC against NCLAT fresh bid order

2 August 2019: Jaiprakash Associates, the parent company of embattled Jaypee Infratech (JIL), on Thursday moved the Supreme Court challenging the National Company Law Appellate Tribunal’s (NCLAT) on Tuesday order that allowed fresh bidding for the debt-laden real estate firm and also barred promoters from participating in the fresh auction.

JAL and Manoj Gaur, the CMD of the suspended management of JIL, in their joint appeal told the apex court that the NCLAT exceeded its jurisdiction and disregarded the strict and mandatory provisions of the IBC by giving another opportunity to the other resolution applicants, including state-owned NBCC and Adani, to resubmit their resolution plans, even though the same have been repeatedly been rejected.

A bench led by justice AM Khanwilar is likely to hear the case on Friday.

While challenging the NCLAT order that held JAL ineligible to submit fresh bids, Gaur asked the apex court to “exercise its extra-ordinary jurisdiction to continue with the restructuring/revival of JIL with an equitable view and consider the settlement proposal” submitted by the promoters wherein they have “strived to optimally utilise the assets of the corporate debtor to run it as going concern and settle the claims of all the stakeholders holistically without providing for any haircuts, while considering the primary objective of the IBC”.

It said that the SC had once permitted JAL to present its proposal before the committee of creditors (CoC) of JIL, but the same was merely rejected as a statutory bar stipulated under the IBC.

JAL had earlier submitted its bid to regain control over its subsidiary and had offered to pay the 100% outstanding amount to creditors without any haircut. It had also offered to complete the unfinished flats within three years.

To enable the fresh bidding process, the NCLAT had also extended the Corporate Insolvency Resolution Process (CIRP) period of JIL for another 90 days, which includes a 45-day window for the resolution professional and lenders of the debt-ridden firm to invite fresh bids. Forty five days would be used to finalise new bids and the rest to cure any discrepancies in the bids.

The appeal stated that the NCLAT had “erroneously and arbitrarily and without any adequate jurisdiction” decided on the exclusion of time especially when an application in this regard was pending before the NCLT. It said that the appellate tribunal had usurped the jurisdiction of the NCLT while holding that total 260 days out of 270 days can be excluded and also by passing an order of exclusion of 90 days from the CIRP of JIL.

Lenders had requested NCLAT to exclude the period from September 17, 2018, from the stipulated period for CIRP, as this time was taken by the NCLT to decide on the voting rights of the homebuyers. However, JAL stated that CIRP of JIL was not stalled at any point of time and this was evident from the fact that the CoC meetings were being duly conducted and decisions with regard to the operations and the resolution process were being taken regularly.

The IDBI Bank-led consortium had initiated insolvency proceedings against JIL for failing to repay debt of around Rs 24,000 crore. The NCLT, Allahabad, had admitted the plea.

In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. In October 2018, the RP had started second round of bidding. While state-owned NBCC’s plan to complete the pending projects was rejected by the lenders, the Adani group is also now in the fray with its unsolicited bid.

Of the total votes polled on the NBCC’s plan, nearly 34.75% of homebuyers had voted in favour, while 1.44% had voted against. As much as 23.8% of the homebuyers had abstained from the voting process. While the homebuyers comprise 59% of the CoC, the 13 banks comprising the other 40.755 had voted against the NBCC’s bid.

The Financial Express reported

FE: Jaypee Infra CoC to discuss fresh bids on August 5

1 August 2019: The committee of creditors (CoC) of Jaypee Infratech will meet on August 5 to discuss the future course of action following the NCLAT’s Tuesday order of extending the resolution period by 90 days. The panel will deliberate on the process for inviting fresh bids for the debt-laden real estate developer.

Sources said the CoC’s agenda includes inviting fresh resolution plans, preparation of the process note for request for resolution plan (RFRP) as well as reducing the notice period for calling a meeting of the panel. This will be the third time that bids are being invited for JIL.

“Although, the NCLAT denied Manoj Gaur any chance of participating, the window is open for NBCC, which is likely to come up with a revised plan. In the last CoC, lenders were not in favour of NBCC’s condition that unsold housing units should be taken over by the bankers. Hence its bid was rejected. Adani Group will also be asked to place its resolution plan,” one of the sources said.

JIL’s corporate insolvency resolution process (CIRP) period of 270 days expired on May 6 this year and the NCLAT in its July 30 order excluded the 90 days for counting the 270 days, which will now be counted from the date of the NCLAT order, that is July 30. This has been done by the appellate tribunal to enable the resolution professional (RP), Anuj Jain and the CoC to call for fresh bids.

“CoC will vote on bringing down notice period for calling a meeting of the panel from five days to two. This means that after it is passed, CoC meetings can be called by giving its members a notice of 48 hours,” sources said.

According to the Insolvency and Bankruptcy Board of India (IBBI) regulations, CoC meetings can be called by giving a five day notice to members, but the panel can reduce this period to not less than two days in case the notice is being sent to an authorised representative and one day in other cases, the source explained.

On Tuesday, a two-member bench headed by NCLAT chairman Justice S J Mukhopadhaya, extended JIL’s CIRP period by 90 days, which includes a 45-day window for inviting fresh bids. Besides rejecting plea of JIL promoter, Jaiprakash Associates to be eligible to submit bid, it has asked the state-owned NBCC to submit a fresh resolution plan.

The NCLAT did not express any opinion over the bid to be filed by Adani. “It is informed that Adani Infra also proposed to file resolution plan, but we are not expressing any opinion with regard to the same,” it said.

The Financial Express reported

LM: The Jaypee jigsaw: Filling the final pieces

31 July 2019: It will be over someday soon, but, hopefully, not before it has taught a lesson to everyone involved—the government, the judiciary, homebuyers, and the promoters of Jaypee Infratech Ltd (JIL), an arm of the Manoj Gaur-run Jaiprakash Associates Ltd (JAL). It is a classic case of greed versus fear—an ambitious promoter unable to manage risks, and a government content with making rules without attempting to enforce them.

The playground was Jaypee’s 6,175 acres of land spread over five locations in Uttar Pradesh, namely Noida, Mirzapur, Jaganpur, Agra and Tappal, with most of it lying in Noida. The land came to JAL in 2007 as part of an Uttar Pradesh government contract to build a 165 kilometres long expressway between Noida and Agra. Things turned sour in 2012 when the real estate market imploded spectacularly, particularly in the boomtowns that ring fence the National Capital Region. Housing projects ground to a halt. Customer advances got stuck in companies on the verge of insolvency, such as Jaypee. Caught in the vortex are now some 20,000 buyers waiting for their dream home in one of the 12 projects that the Jaypee group planned to construct at its so-called “Wish Town” township.

For some, the wait is now well over five years, even as at least 50 cases do the rounds in the Supreme Court, the National Company Law Appellate Tribunal (NCLAT), the National Company Law Tribunal (NCLT), and various consumer courts. The latest Supreme Court judgment in the Amrapali matter— another case of homebuyers versus an errant builder—has rekindled hope among Jaypee customers of an early resolution.

The apex court last week cancelled the licence of Amrapali Group and asked NBCC (India) Ltd to take over all its ongoing, unfinished housing projects. “The Supreme Court has unequivocally put the homebuyers’ interest at the top of the ladder and we hope other stakeholders and quasi-judiciary bodies take a message from this ruling,” says Aaditya Gutgutia, a 38-year-old homebuyer who put money into a “Wish Town” apartment. “Homebuyers are looking at NBCC and banks with a lot of hope… that our agony will end soon.”

On Monday, the Supreme Court ordered NBCC to take over as a consultant and find a way to complete a slew of unfinished housing projects that belong to Unitech Group, whose promoters are currently in jail for defrauding homebuyers. For the thousands of homebuyers who sunk their hopes on barren patches of land in Noida, the wheels of the system finally seem to be creaking forward.

The Jaypee saga, in particular, will leave ripples across the real estate industry for years to come. It was perhaps the first insolvency case against a real estate developer in India. The slew of court battles that ensued have already resulted in two marquee changes: a homebuyer is on par with a bank or lender in an insolvency court, and there is now the new threat of a public sector entity, like NBCC, taking over incomplete housing projects.

“We are clearly past the wild west bonanza where builders operated on the basis of flimsy business models,” says Arun Maira, a member (urban affairs) at the erstwhile Planning Commission. The era of zero finance from the builder, where customers paid money upfront, is over, Maira says, and adds that significant changes in law and regulations are inevitable going forward since the Supreme Court has clearly set a precedent by siding with the weaker party, the consumer.

But even as those fairer terms of engagement, between homeowner and developer, await to be written, for those trapped in the middle, the immediate concern is: who will build the houses and when will it be built? One critical difference between the Amrapali case and Jaypee case is that there are still assets (like the Yamuna Expressway) lying with Jaypee, all of which can be monetized. That has resulted in homeowners and banks fighting pitched battles in the halls of bankruptcy tribunals. Banks would, after all, like to liquidate the assets and recover as much money as possible, while homebuyers would want someone to build them a home. In August, the Jaypee liquidation drama would cross 350 days since it began last year. And all eyes, unsurprisingly, are on the Supreme Court. “As the matter is already before the Supreme Court, it can take a very radical approach,” says Manoj Kumar, partner at legal and corporate advisory firm Corporate Professionals.

While it is one particular case involving a single developer, the outcome may have wide-ranging fallout in a country where an estimated 500,000 houses remain unfinished for well over six years in the top seven cities alone.

Boom and bust

J.S. Bedi, 43, who works a medical representative for a pharmaceutical company, had booked a ₹74-lakh four-bedroom house in 2011 at Kensington Boulevard, one of those 12 housing projects at Wish Town. It’s a daily struggle for Bedi, who lives in a rented house at Ashram Chowk in Delhi with his wife and two children. “I have already paid ₹67 lakh. My wife can’t go out to work as she has to look after her father. I earn little and pay most of it as EMIs,” he says.

It was the heydays of the first decade of this century, with all asset classes booming—equities, gold, commodities, and, of course, real estate. Gaur then, coming into his own after his father and founder of the Jaypee group had ceded day-to-day operations, was a businessman on overdrive. The group went into major expansion in power and cement capacities between 2005 and 2012. At one point, JAL was the third largest cement manufacturer in the country with an annual capacity of 33 million tonnes.

Rumoured to have close ties to the then Uttar Pradesh chief minister and Bahujan Samaj Party chief Mayawati, every tender that Gaur touched turned into gold. That fetched him the expressway order that would eventually prove to be his nemesis. JIL was JAL’s special purpose vehicle (SPV) that would develop, operate and maintain the expressway that arguably is one of the best pieces of infrastructure created in the country. A Formula 1 track on the expressway, besides a hospital, a school and a college came up alongside.

Over the next four to five years, the group would go on to announce as many as 27 real estate projects—split between JAL and JIL—comprising flats and villas of various sizes to cater to classes ranging from the middle-income groups to the super rich. The group would run full-page advertisements in leading newspapers, offering dream homes at five locations in Uttar Pradesh. Many non-residents, either returning to India or those remitting money, bought into the promise.

“We met a lot of people… friends, bankers who had and who did not have exposure to the group. And all advised us to book a house. We were looking for a spacious living in a greener, more secure area,” says 62-year-old Ajoy Shah.

And then came the collapse of the real estate sector, somewhere around 2012-13. The Noida region was the worst-hit. Banks curtailed lending and consumers withdrew. The industry went into a tailspin as the Narendra Modi government went after black money. To make matters worse, an adverse ruling in 2015 by the National Green Tribunal, banning all construction within a kilometre of the Okhla Bird Sanctuary, an area not far from Noida, further affected sentiment. The November 2016 demonetization sucked the remaining life out of the informal sector, a key component of the real estate boom.

As the banking sector stared at mounting bad debts, the government enacted the Insolvency and Bankruptcy Code, 2016 to help lenders explore all options to recover their money within a time frame. The law set a 270-day deadline to find a resolution. JIL found its name in a list of 12 companies the Reserve Bank of India (RBI) had prepared and sent to the banks in June 2017 to invoke bankruptcy proceedings. Gaur was caught napping while he had been trying to work out a deal with IDBI Bank, one of the lenders. But now, the only recourse was the NCLT, Allahabad, where the case would proceed.

It dealt a body blow to the likes of Ajoy Shah. Having booked his house in 2010, he paid his last equated monthly instalment (EMI) this year but awaits his dream house—a three-room flat in Kensington Boulevard. “There is no communication from the firm. We last got a letter from them in 2013 that the delivery would happen three years later. We are still waiting for the handover as we go around doing the rounds of the Supreme Court, the NCLT and the consumer courts,” he says.

Bankruptcy battle

Jaypee’s bankruptcy case was unique as it affected not just the banks, but also around 26,000 homebuyers, as per figures then. All other cases in the RBI’s early list were mostly industries or infrastructure companies. Hence, Jaypee quickly became a matter of public interest.

“It’s very painful,” says Ajai Kaul, a 55-year-old director of technology at a multinational corporation. “We were thrown out of our own home state, Kashmir, in the 1990s. Thirty years ago, I slept on the floor at various migrant shelters in Delhi. I made it on my own through sheer hard work. I paid ₹40 lakh upfront for my house and another ₹10 lakh for a shop there. I have two brothers who also booked houses there and each paid as much. None of us has got any flat. Banks seem to be in collusion with the builder.”

A forensic audit report by T.R. Chadha & Co. Llp for the period between 1 April 2014 to 31 March 2017 found banks ever-greening the group’s loans and imposing inexplicably high penalties for pre-payment, a strange occurrence given that JIL was in trouble and thousands still awaited the handover of homes.

“JAL and JIL were both ripped-off by banks. Banks have already recovered their principal amount. The litigation has been on for two years now and I believe the case should be settled outside the court,” says Krishan Mitroo, a 75-year-old homebuyer and a former air force pilot.

With nearly a decade of their life gone, even the homebuyers are now divided. Earlier, nine resident groups had been set up just to fight the court battles, but now, some are in favour of a settlement—as long as they get the promised apartment. With almost a 60% strength in the ongoing arbitration process, homebuyers have been pushing for a government entity to take over and end the uncertainty. The Noida Development Authority has also given early indication of setting up a “stress fund” to disburse seed money to kick-start stalled projects. While NBCC taking over Jaypee sites as well and using the stress fund to get things started is one option, there are already growing concerns about what these thousands of unfinished homes may do to the balance sheet of the publicly listed company.

Irrespective of how exactly the Jaypee saga drags towards a resolution, the case has changed the real estate industry’s outlook forever. “If we consider trends in residential real estate over the last two years, demand for ready-to-move-in properties spiked significantly across cities, primarily led by the end users,” says Anuj Puri, chairman of Anarock Property Consultants.

The Real Estate Regulatory Authority (Rera) is also helping the cause, bringing some trust back into the system. “Rera has created a sense of discipline and accountability in developers,” Puri says.

Way forward

But Rera, an entity formed after Jaypee was admitted as a bankruptcy case, offers no hope to the its stranded buyers. They continue to fight their battle at the NCLAT and the Supreme Court.

Awaiting the Supreme Court order, Jaypee cannot be liquidated, which is otherwise a certain outcome in all insolvency cases where no resolution is found. While a mail sent to the company remained unanswered, a top official at the company cited, like Mitroo, Gaur’s handing over of the flats in the interim as proof of his commitment. He was not willing to come on record as the matter is sub judice.

The third round of bidding is underway as this story is published, the first two having failed as the banks were unwilling to accept the low quotes offered by the bidders. Mitroo remains sceptical. “I wonder how a new buyer will come and complete the projects when Jaypee is best positioned to do it. After all, the new buyer will also want a return,” he says. Between Mitroo and the Shahs and the Kauls is the story of the Indian real estate buyer. Everything rests on hope but nobody knows who the enemy is. As Kaul says, “I don’t care who builds it. I want my house. I feel I am back to where I started 30 years ago.”

The LiveMint reported

FE: Will repay Jaypee Infra’s dues, hand over flats in 3 years: Jaiprakash Associates

23 July 2019: With a view to wrest back control of its insolvent subsidiary Jaypee Infratech (JIL) under the provisions of Insolvency and Bankruptcy Code (IBC), which allows lenders to withdraw an insolvency petition, parent Jaiprakash Associates (JAL) on Monday said it would repay creditors their entire dues and hand over flats to homebuyers in three years.

JAL’s proposal is better than Suraksha and NBCC, who have evinced interest in JIL. So, the committee of creditors (CoC) should consider its offer under section 12A of the IBC, JAL’s counsel said before the National Company Law Appellate Tribunal (NCLAT).

JIL has Rs 9,800 crore outstanding to 13 banks. It is also required to complete around 20,000 flats and hand them over to buyers.

The two-member NCLAT Bench, headed by chairman Justice SJ Mukhopadhaya, has agreed to hear JAL’s plea. The counsel alleged that a proposal was made earlier before the CoC to withdraw the insolvency appeal, but it had fallen on deaf ears.

The NCLT allows withdrawal of an application admitted under section 7,9 or 10 of the IBC with the approval of 90% voting share of the CoC. JAL does not want liquidation of the company. It also does not want extension of the time period for the ongoing Corporate Insolvency Resolution Process (CIRP), the counsel said.

The NCLAT Bench has asked JAL to file written submissions over exclusion of time frame. It has scheduled the matter for “orders” on July 29.

On an application filed by a consortium led by IDBI Bank, JIL was admitted for initiation of insolvency process on August 2017. In the first round of insolvency proceedings conducted last year, the `7,350-crore bid of Lakshadweep, part of Suraksha Group, was rejected by lenders.

Later in October 2018, the IRP started the second round of bidding process. In all, five companies had submitted expression of interests, but only Suraksha and NBCC submitted financial bids. The CoC has rejected both the bids.

The Financial Express reported

ET: Jaypee Infra: NCLAT reserves order on extension of resolution process

22 July 2019: The National Company Law Appellate Tribunal (NCLAT) on Monday reserved the order over IDBI Bank’s request to extend Jaypee Infratech’s (JIL) resolution process by excluding around 250 days from the ongoing process.

The two-judge bench headed by NCLAT Chairman Justice S.J. Mukhopadhaya will pass the order in its next hearing on July 29.

The lead banker to the bankrupt realty firm had in the previous hearing on Friday told that on September 17, 2018, an application was filed in the National Company Law Tribunal (NCLT) for clarification on the apartment allotees’ voting share and the tribunal decided on it on June 4, 2019.

The lenders wanted this period during which no bid could be approved by the Committee of Creditors (CoC) to be excluded.

Under the Insolvency and Bankruptcy Code (IBC), the resolution process of a company is mandated to be concluded within 270 days, failing which the company has to go for liquidation. The 270-day deadline for Jaypee Infratech ended on May 6.

The appellate tribunal also asked Jaypee Associates Ltd (JAL) to file a submission on its stand on liquidation and extension of the process and what it sees as the way forward, after the company asked the tribunal not to extend the process, while saying that it did not want liquidation of the firm.

Justice Mukhopadhaya observed that if the process is not extended, the only possible step would be liquidation.

The Economic Times reported

MC: NCLAT ‘breached’ IBC provision by extending time limit, Jaypee buyers allege

18 July 2019: A group of 1000 Jaypee homebuyers have approached the apex court against the NCLAT’s direction to representatives of banks, allottees and other stakeholders to appear before it on July 17 to consider how the NBCC resolution plan could be amended for the benefit of homebuyers. The petition says that the “failure” of the resolution process presents a “frightening and extremely disturbing picture to homebuyers” and that “valuable time has been wasted” without reaching any constructive result.

The order of NCLAT on July 2 to reopen CIRP proceeding for negotiation, which has failed twice by now, is “beyond and contrary to the provisions of IBC” and it further “frustrates the Home Buyers as ultimately it will not lead to any affirmative solution,” they said in the petition.

They have also alleged that the NCLAT has “breached” the Insolvency and Bankruptcy Code provision by extending the time limit for completion of CIRP beyond 180 plus 90 days. They have said that there is no solution in IBC to the complex problem involved in this case.

“Because already two rounds of CIRP, the first from 09.08.2017 to 09.05.2018 and second from 09.08.2018 have been frustrated and there is no hope that further result of CIRP would lead to any solution and in the process only precious time would be lost further,” the petition filed by advocate M L Lahoty said.

In their petition to the Supreme Court submitted on July 16, the group of buyers has claimed that the interest of financial creditors as secured creditors, vis-à-vis the homebuyers, is totally opposite and “irreconcilable”. While the financial creditors, namely banks, would prefer the liquidation of the assets of the company and the realization of their funds, the homebuyers’ interest would only be served by the completion of projects, as well as the delivery of their apartments, and not by liquidation.

As for NBCC taking up completion of the stuck projects, the buyers expressed their apprehension, stating that the experience of over 48,000 homebuyers of Amrapali with regard to NBCC was “extremely frustrating” since NBCC had refused to invest and/or arrange any funds for the construction of the project due to which no further construction or completion work was being carried out.

The appellate tribunal (National Company Law Appellate Tribunal) said in June that its priority was to take care of the interest of the home buyers. It asked the representatives of various stakeholders involved to appear before it in the next hearing on July 17 to find how NBCC’s plans could be altered for the benefit of all, specially the homebuyers. According to the bench, NBCC is a government company, and one can rely on it. It knows “the pain of allottees”, and wants to do justice for them, it added.

Challenging the order, the petitioners said, “The NCLAT has erroneously usurped the functions/powers of the resolution professional wherein NCLAT has sought to call the representatives of the financial creditors, the resolution applicant, the resolution professional, the allottees and the fixed deposit holders for conducting such renegotiation for the resolution plan on July 17 especially when the resolution plan has already been rejected once by the majority of the creditors after the expiry of the statutory period.”

In its revised bid, NBCC agreed to reduce the value of unsold inventories offered to lenders by around 25 percent. The public sector firm proposed that it would reduce the value of unsold inventories offered to lenders to Rs 1,300 crore from earlier Rs 1,750 crore.

Banks have been reluctant to acquire over 2,000 unsold flats, as proposed by NBCC in its revised offer.

However, NBCC did not dilute other conditions in its offer, including the exemption from future tax liability, mentioned in its bid. In its revised offer, NBCC proposed the infusion of Rs 200 crore equity capital, the transfer of 950 acres of land worth Rs 5,000 crore to banks and the completion of flat construction by July 2023 to settle an outstanding claim of Rs 23,723 crore of financial creditors.

But, it 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.

Business conglomerate Adani group made an unsolicited and non-binding bid in June to acquire Jaypee Infratech. It is ready to infuse up to Rs 1,700 crore to expedite the construction of stuck housing projects of the debt-laden realty firm and deliver flats to home buyers.

As many as 13 banks and over 23,000 homebuyers have voting rights in the committee of creditors (CoC). Buyers have nearly 60 percent votes. For the bid to be approved, 66 percent voters should be in favour of the deal.

Earlier in May, creditors – including banks and homebuyers – rejected a bid by Mumbai-based Suraksha Realty through a voting process, following which the CoC decided to consider NBCC’s offer.

Jaypee Infratech went into an 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.

As reported on Moneycontrol

TOI: Jaypee insolvency: NCLAT asks IDBI Bank to furnish conditions for fresh bidding

17 July 2019: The National Company Law Appellate Tribunal (NCLAT) on Wednesday directed IDBI Bank, the lead lender of debt-ridden Jaypee Infratech, to file an affidavit listing out new terms and conditions if a fresh round of bidding is conducted. A two-member bench headed by chairman Justice S J Mukhopadhaya has asked IDBI Bank to file an affidavit by Friday in this regard. The appellate tribunal has listed the matter for next hearing on Monday.

“Counsel appearing for lenders is allowed to file new terms and conditions in case fresh bidding takes place,” the bench said. In the second round of bidding, the committee of creditors (CoC) had first rejected the resolution plan of Suraksha Realty and then voted against state-owned NBCC’s offer. In the voting that took place on NBCC’s bid, 34.75 per cent of home buyers voted in favour, 1.44 per cent voted against, whereas 23.8 per cent did not vote. All the 13 banks, which constitute 40.75 per cent of CoC, voted against the bid by the state-run firm to acquire Jaypee Infratech. Home buyers have nearly 60 per cent voting rights in the CoC. In its hearing on Wednesday, the appellate tribunal has suggested some guidelines for new terms and conditions. “All allottees would be given flats according to their builder buyer agreement. If allottee not present then CoC has to decide how it has to be adjusted,” the bench said. “Land attached to the building and with common area amenities would remain with the allottees,” it added. Meanwhile, NCLAT also orally suggested to the counsel representing the Adani Group to improve its bid. Adani has made an unsolicited offer to acquire the debt-laden realty firm.

Jaypee Infratech went into insolvency in August 2017 after the National Company Law Tribunal (NCLT) admitted an application filed by an IDBI Bank-led consortium. In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshadweep, part of Suraksha Group, was rejected by lenders. Later in October 2018, the IRP started the second round of bidding process.

The Times of India reported