TOI: Supreme Court assures Jaypee homebuyers to protect their interest

12 July 2019: The Supreme Court said that it would intervene to protect Jaypee homebuyers if the resolution plan under the insolvency proceedings failed on Thursday. It is likely to step in order to stop liquidation of the company to safeguard the investment of the buyers. It asked all the parties to work together including NBCC and creditor banks, to sort out differences over the plan. 

After failing to come up with a policy to protect buyers’ interest, the Centre urged a bench headed by Justice A M Khanwikar to adjourn the hearing as the case was listed before the National Company Law Appellate Tribunal (NCLAT) on July 17 for a final decision on the resolution plan. It posted hearing for July 18. The court said in an attempt to take over Jaypee Infratech Ltd which is facing insolvency proceedings, the parties should explore all possibilities to pave the way for other builders.

The bench has assured the homebuyers that their interest would be protected, they have urged the bench to pass an interim order to stop liquidation of the company, according to a newspaper report. “We should wait for the outcome of the tribunal proceedings. We also want the government to explore all possibilities. If the proposal (resolution plan) given to the tribunal is acceptable to all, then the problem will be solved,” the bench said.

It may be noted that in 2017, Jaypee Infratech went into insolvency after the National Company Law Tribunal (NCLT) admitted an application by an IDBI Bank-led consortium seeking action under the Insolvency and Bankruptcy Code (IBC).

After the creditors rejected NBCC’s bid to acquire Jaypee Infratech, the NCLAT had directed representatives of banks, allottees and other stakeholders to appear before it on July 17 to consider how the bid could be tweaked for the homebuyers’ benefit.

The bid to acquire the insolvent Jaypee Infratech Ltd (JIL) was put to vote from May 31, 2019 to June 10, 2019 and a majority of the lenders, led by IDBI Bank, voted against the bid on the grounds that it was conditional. However, home buyers were in favour of the bid.

It may be noted that the NBCC’s bid seeks the cancellation of an estimated income tax liability of Rs 33,000 crore due over a period of 30 years under the concession agreement for the transfer of land from the Yamuna Expressway Industrial Development Authority to JIL.

On June 20, in the committee of creditors’ (CoC) meeting, the offer was discussed and it was decided that resolution professional (RP) Anuj Jain would inquire from AIDPL about the completion timeline.

The Times of India reported

TI: Adani role in Jaypee under fire

3 July 2019: The National Company Law Appellate Tribunal (NCLAT) on Tuesday came down hard on banks for their “backdoor” talks with the Adani group to acquire Jaypee Infratech Limited (JIL) even as they rejected state-owned NBCC’s bid for the realtor, which went bankrupt without giving possession to as many as 23,000 home buyers.

A three-member bench led by chairperson Justice S.J. Mukhopadhaya said only NBCC’s plan should be considered at this stage as it was “a government company and one could rely on it”.

The observation by the NCLAT came after the banks requested the appellate tribunal to allow them to call for and consider other bids, including the one by the Adani group as it was offering more money and had promised to complete the pending projects of Jaypee in nine months.

The NCLAT, however, slammed the banks for their “backdoor” negotiations with the Adanis. If the group had a good proposal to finish the project, it should file an intervention application and appear before the appellate tribunal, the three-member bench said.

The Adani group, the appellate tribunal observed, does not have the relevant experience in the infrastructure space and hence should not be considered.

The Adani offer, and other proposals, should be considered only if the resolution plan submitted by NBCC failed to make any headway despite the NCLAT’s intervention, Justice Mukhopadhaya said.

He reiterated that in the interest of home buyers, the resolution of Jaypee Infratech would not be allowed to fail.

The tribunal was informed that in the voting that took place on NBCC’s bid, 34.75 per cent of the home buyers voted in its favour, 1.44 per cent voted against it, whereas 23.8 per cent did not vote.

All the 13 banks, which constitute 40.75 per cent of Committee of Creditors (CoC), voted against the bid by the state-run firm to acquire Jaypee Infratech.

The voting started on May 31 and concluded on June 10. Home buyers have nearly 60 per cent voting rights in the committee of creditors.

Justice Mukhopadhyaya directed the representatives of banks, allottees and other stakeholders to appear before it on July 17 to consider how the bid could be tweaked for the benefit of the home buyers.

It asked the banks to nominate a high-ranking officer who will negotiate, while asking them to produce a gist of the resolution plan submitted by NBCC and the objections they have with regard to the plan.

In its revised offer, NBCC has proposed an infusion of Rs 200 crore equity capital, transfer of 950 acres of land worth Rs 5,000 crore to banks and completing the construction of the flats by July 2023, to settle an outstanding claim of Rs 23,723 crore of the financial creditors.

Apex court hearing

The Supreme Court will hear next week a plea seeking that Jaypee Infratech Ltd not be sent into liquidation. The apex court had on August 9 last year ordered the re-commencement of the resolution process against JIL .

A fresh application in the matter came up for hearing on Tuesday . The plea, filed by one of the home buyers , sought direction that an “independent and thorough forensic audit” of JIL should be conducted from the date of its incorporation.

As many as 13 banks and over 23,000 home buyers have voting rights in the CoC of Jaypee Infratech. Home buyers represent nearly 60 per cent of voting rights, while banks have the rest. For approval of any resolution plan, at least 66 per cent votes should be in favour.

NBCC, while bidding for JIL, had asked to be exempted from income tax liability as well as from taking consent of development authorities for transfer of businesses. It had also not agreed to change its proposal that lenders take unsold flats in case the state-owned firm fails to sell them in the market.

JIL was taken to the National Company Law Tribunal (NCLT) by an IDBI Bank-led consortium for failing to repay debt worth nearly Rs 24,000 crore.

In most bankruptcy proceedings, lenders have the right to vote for or against a resolution plan for a debt-laden firm. In the case of realty firms, home buyers also have voting rights at par with lenders.

Meanwhile, the Supreme Court will hear next week a plea seeking that Jaypee Infratech Ltd not be sent into liquidation although the deadline for the corporate insolvency resolution process is over, as it would cause “irreparable loss” to thousands of home buyers.

The apex court had on August 9 last year 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).

The Telegraph India reported

BS: SC to hear plea next week on preventing Jaypee Infratech’s liquidation

2 July 2019: The Supreme Court will hear next week a plea seeking that Jaypee Infratech Ltd not be sent into liquidation although the deadline for the corporate insolvency resolution process is over, as it would cause “irreparable loss” to thousands of home buyers.

The apex court had on August 9 last year 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).

It said there was “no manner of doubt” that JAL and JIL lacked financial capacity and resources to complete unfinished housing projects in which over 21,000 home buyers had not been given the possession of their flats till then.

A fresh application in the matter came up for hearing on Tuesday before a bench comprising Justices A M 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 last year 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.”

As per apex court’s direction, the 270 days for completion of CIRP have concluded on May 6, 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 “threat” of JIL going into liquidation is “turning into a reality with each passing day”.

It said if no resolution plan is accepted till May 6, JIL would “automatically go into liquidation”, leaving thousands of home buyers in lurch and without any remedy.

“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 sufferer 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.

The Business Standard reported

ET: Over 400 home buyers suggests COC considers Jaypee’s proposal

1 July 2019: Over 400 Jaypee homebuyers suggested that COC considers the proposal made by Jaypee Group under section 12A.

They conducted a candle light march at India gate on Sunday to urge the authorities to expedite the completion and delivery of their flats in the beleaguered project.

Buyers are demanding an end to the time consuming litigation process.

The homebuyers have made written appeals to the Finance Minister and the Minister of Housing and Urban Affairs in India demanding COC should look beyond NBCC to deliver homes. They also said that no bidder should be allowed to make any conditional bid and hold homebuyers as hostage.

They also suggested that IDBI should take more time from NCLAT for resolution and finally accept the meritorious proposal after considering all the aspects of Jaypee.

The Economic Times reported

LM: NBCC ‘no more interested’ in Jaypee Infra acquisition

30 June 2019: Although the distressed home buyers of Jaypee Infratech Limited (JIL) are urging the government to intervene in the resolution process of the bankrupt realty firm in support of NBCC’s bid, the public sector construction major, according to sources, is no more interested in acquiring JIL and its stalled projects.

After the latest round of voting, whereby NBCC’s bid was rejected as the banks led by IDBI Bank voted against it, the management in the state-run company is not enthusiastic about moving ahead on that front as there is no “possible chance of unanimity among the home buyers and the banks,” sources said.

“Such are the differences that, if the banks are ‘north pole’, home buyers are ‘south pole’. The only possible way forward for Jaypee seems to be liquidation,” said an NBCC official.

“We are not aggressive. If we were aggressive, our lawyer would have been there at the NCLAT now,” the official added.

Further, change in guard at the ‘Navratna’ company has also impacted its approach towards the bankrupt JIL, people in the know of things said.

NBCC Chairman Anoop Kumar Mittal, who was known to be bullish with his intention to acquire JIL, relinquished his office in March 2019 after the government denied extension of his service till his date of superannuation in January 2020.

Another bureaucrat, Shiv Das Meena, assumed the office of Chairman-cum-Managing Director, NBCC (India), with effect from April 5, 2019.

Home buyers, on the other hand, have off late protested and written letters to the Prime Minister, Finance Minister and the Housing and Urban Affairs Minister asking the government to direct the IDBI Bank to accept the NBCC bid.

The bid to acquire the insolvent JIL was put to vote from May 31 to June 10 and a majority of the lenders, led by IDBI Bank, voted against the bid on the grounds that it was conditional. Home buyers, however, were in favour of the bid.

The NBCC’s bid seeks the cancellation of an estimated income tax liability of ₹33,000 crore due over a period of 30 years under the concession agreement for the transfer of land from the Yamuna Expressway Industrial Development Authority to JIL.

After the last round of voting, Adani Infrastructure and Development (AIDPL), which in April had shown interest in acquiring Jaypee Infratech’s assets, earlier this week said that it would complete the stalled projects in four years time if it is allowed to take over JIL. This is the second time Adani group has shown interest in acquiring the insolvent company.

In the committee of creditors’ (CoC) meeting on June 20, the offer was discussed and it was decided that resolution professional (RP) Anuj Jain would inquire from AIDPL about the completion timeline.

The CoC is likely to issue fresh expressions of interest (EoI) for JIL after the National Company Law Appellate Tribunal’s (NCLAT) hearing on the IDBI Bank’s plea over NBCC bid on July 2.

The LiveMint reported

FE: Will complete Jaypee Infra’s projects in 4 years, Adani tells committee of creditors

28 June 2019: Adani Infrastructure and Development (AIDPL), which in April evinced interest in acquiring Jaypee Infratech’s (JIL) assets, earlier this week said if it is allowed to take over the cash-strapped real estate developer, the company will complete the pending housing projects in four years in a phased manner. This is the second time Adani group has shown interest in acquiring JIL’s assets.

Sources said during the last meeting of JIL’s committee of creditors (CoC) on June 20, Adani group subsidiary’s offer was discussed and it was decided that resolution professional (RP) Anuj Jain would inquire from AIDPL about completion timeline.

Since NBCC’s revised bid has been rejected by CoC, the panel in all likelihood will issue fresh expressions of interest (EoIs) for JIL, but it will be based on the outcome of the July 2 hearing at the National Company Law Appellate Tribunal’s (NCLAT) on the plea filed by the lead banker to JIL, IDBI Bank.

Jain informed CoC that the Adani group is still interested in participating in the corporate insolvency resolution process (CIRP) and has been in regular touch with him. It is also actively following up on its EoI, said one of the sources. “Legal adviser of bankers and financial institutions (secured financial creditors), Cyril Amarchand Mangaldas (CAM) urged Jain to inquire from AIDPL about its position on construction timelines for various housing projects to which RP agreed and asked AIDPL for the construction timelines so that homebuyers could get more clarity,” the source added.

In its submission, AIDPL said it requires six months for mobilising resources from the date of taking over JIL’s projects and the remaining 14 quarters would be needed to complete the housing units, including the hand over to homebuyers.

When contacted, an Adani group spokesperson did not offer any response.

AIDPL is a wholly owned subsidiary of Adani Properties, which in turn is held by the Adani family. It is engaged in real estate and is the holding firm for various real estate special purpose vehicles of the Adani group.

At the June 20 CoC meeting, representatives from IDBI bank proposed that in case NBCC’s revised bid is not approved by the CoC, there should be an option for a fresh EoI to gauge market interest.

Asked for clarifications on issuing fresh EoIs, CAM said such a step would not amount to a breach of the NCLAT order as EOI is being issued to gauge interest and is not going to be binding, said another source. “CAM said since AIDPL already has shown interest through its unsolicited non-binding offer and there might be other interested parties too. Hence, their assessing market response should not be an issue,” he added.

CAM lawyers added that application for exclusion of elapsed period for purpose of calculating the time period of CIRP is also pending with the National Company Law Tribunal (NCLT) and there are “good grounds” to seek the same and CoC may get more time to run the process of fresh EOI.

Some of the lenders, including IDBI Bank, ICICI Bank, Bank of Maharashtra and Axis Bank, were in favour of issuing a fresh EoI if it was legally viable. The rest wanted to wait for the outcome of the July 2 hearing at NCLAT.

Jain suggested that although there is no legal bar in the Insolvency and Bankruptcy Code (IBC) or going by the NCLAT order to explore more avenues, it would be proper not to issue a fresh EoI as the result of the voting on NBCC’s revised resolution plan is yet to be placed before the NCLAT and considered by it. He recommended to wait till July 2, which was agreed by the CoC.

The Financial Express reported

CNBCTV18: Jaypee Infratech homebuyers ask govt to direct IDBI Bank to vote for NBCC’s resolution plan, want forensic audit of JIL and promoters

24 June 2019: Buyers of homes sold by builder Jaypee Infratech Limited (JIL), which has been dragged to a bankruptcy court, have approached the government to direct the IDBI Bank-led lenders to vote in favour of the state-run NBCC’s resolution plan.

The buyers contend that the resolution plan favoured by IDBI Bank is not in their interest or that of public sector lenders. The lenders reportedly have reservations to NBCC’s bid.

“We believe that your government has a golden opportunity to resolve this issue as JIL in under Corporate Insolvency Resolution Plan Process (CIRP) as per the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) and a Government of India Navratna — NBCC, has made a bid to acquire JIL,” they said in a letter addressed to the Prime Minister Narendra Modi and finance minister Nirmala Sitharaman.

The buyers have also asked the government to direct a forensic audit of Jaypee Infratech Limited (JIL) and its promoters Jaypee Associates Limited (JAL) from the time of their inception.

On the resolution plan, they want the majority of homebuyers in the committee of creditors (CoC) to be treated as the vote of the whole voting sub-class of homebuyers.

Many buyers of apartments in a mega township project being built by Jaypee Infratech on the outskirts of New Delhi paid for the properties about a decade ago but have yet to take possession.

In 2017, Jaypee Infratech went into insolvency after the National Company Law Tribunal (NCLT) admitted the application by an IDBI Bank-led consortium seeking resolution of the firm.

During the first round of insolvency proceedings, the Rs 7,350 crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders.

In October 2018, the IRP started a fresh initiative to revive Jaypee Infratech on the NCLT direction.

JAL had submitted Rs 750 crore in the registry of the Supreme Court for the refund to buyers and the amount is lying with NCLT.

The CNBCTV18 reported

FE: Jaypee Infratech insolvency: Resolution hits roadblock as divided homebuyers spar

21 June 2019: The corporate insolvency resolution process (CIRP) of cash-strapped Jaypee Infratech (JIL) has hit a roadblock with the homebuyers divided in two groups — one in favour of considering Manoj Gaur and Adani group’s resolution plans, while the other wants to explore legal options for possession of their flats.

Sources said JIL’s committee of creditors (CoC) met on Thursday after lenders requested for the meeting after the June 10 order of the National Company Law Appellate Tribunal (NCLAT), where it said that lenders can vote against NBCC’s revised bid.

“The meeting was a waste as there was no consensus among homebuyers, who are divided in two groups. Today’s meeting was to explore the way forward after NBCC’s revised bid got rejected. Lenders and a section of homebuyers want to consider the revised bids of Manoj Gaur and Adani group,” said one of the sources.

Another source said some lenders and homebuyers favoured considering section 12A of the Insolvency and Bankruptcy Code (IBC) and allow CoC to discuss the revised bid of Gaur. A section of lenders also said there is no harm in considering Adani group’s expression of interest (EoI), too, as it could help to fast track the CIRP.

“However, the talks were not conclusive as the CoC wants to wait for July 1 for the hearing on prime lender, IDBI bank’s plea in the NCLAT. After this hearing the CoC will meet again most likely on July 2 or within the week,” he added.

Section 12A of the IBC allows corporate debtor another chance to make good on the default and retain control over the firm even after the case is admitted to National Company Law Tribunal (NCLT).

Another source who works for one of the lenders said: “We feel that Gaur’s resolution plan should also be considered. Since NBCC’s bid is not accepted, the issue has again gone back to square one. Also with the homebuyers divided, there is confusion.”

There is a clear division in the CoC with lenders on one side supported by one group of homebuyers who want to consider Gaur and Adani group’s bids. This group is of the view that their authorised representative Kuldeep Verma is supporting the other group of homebuyers who want to explore legal option.

“Lenders feel that since most of the options have been exhausted, there is no other way to consider Gaur’s offer rather than again go for another CIRP, which means more delay,” he added.

NBCC’s revised resolution plan was defeated as the company was adamant that it will keep the unsold inventory, to which the lenders did not agree, said one of the sources.

The Financial Express reported

FE: Jaypee Infratech lenders moot fresh plan to complete housing projects

17 June 2019: Lenders to Jaypee Infratech are now working on an alternative resolution plan for the bankrupt firm, which involves creation of a special purpose vehicle to securitise highway toll receivables from Yamuna Expressway for fresh investments which would be used for completion of the housing projects.

The returns from sale of the completed flats would then be used for reducing the lenders’ existing liabilities, a senior banker aware of the developments told FE.

“An investment of Rs 2,500-3,000 crore is required to complete the pending housing projects. However, with existing lenders unable to put in fresh money, at least three parties, including Deutsche Bank and Cube Highways, have been approached to invest funds against receivables of the toll money from the highway over say, 10 years or so. These funds will be used to complete housing projects,” the banker said.

“Lenders expect money on sale of the completed flats. Since as of now, on average, the buyers have only paid 30%-40% of the total amount and almost 80% homebuyers have shown interest to take possession of their flats on completion; the money that comes through sale of these flats, can be used by the lenders to extinguish their current liabilities. This entire plan is envisaged to unfold over the next 5-10 years,” the banker added.

As per the plan, learnt to have been suggested by IIFCL, one of the lenders within the consortium, bankers will be owners of the above-mentioned SPV, indicating that the liability of any investment made by investors against securitisation of toll money will lie with the lenders.

The above-mentioned plan also involves creation of a second SPV that could help monetise any parcels of land that are offered in lieu of debt. When the plan is fully formulated and finds takers, lenders will approach the National Company Law Tribunal with the proposal for its approval.

In the meantime, lenders are also valuing a prospective bid submitted by Adani Group, the banker said, without spelling out any details. The next meeting of the committee of creditors is scheduled to be held on June 20. In 2017, Jaypee Infratech was admitted into the insolvency process by the National Company Law Tribunal (NCLT) based on application 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 the Suraksha Group, was rejected by lenders. Later in October 2018, the interim resolution professional started the second round of bidding process to revive JIL on the NCLT’s direction. Earlier this month, a majority of lenders voted against state-owned NBCC’s bid, after the National Company Law Appellate Tribunal (NCLAT) clarified it hadn’t barred lenders from voting against the plan.

The Financial Express reported

MC: Jaypee Infra creditors to meet on Jun 20 to decide future course

15 June 2019: Jaypee Infratech’s creditors, which include banks and home buyers, will meet on June 20 to assess the progress of the ongoing insolvency process and decide future course of action. The meeting has been called days after majority of banks voted against state-owned NBCC’s bid to acquire the debt ridden realty firm.

A meeting of Committee of Creditors (CoC) will be held on June 20, 2019, Jaypee Infratech’s Interim Resolution Professional (IRP) Anuj Jain said in a regulatory filing.

He did not disclose the agenda of the meeting.

Sources, however, said that the CoC has been called to discuss the status update of the ongoing insolvency proceedings and the way forward.

A majority of lenders voted against NBCC’s bid on June 10 but most home buyers wanted the state-owned company to takeover the debt-laden realty firm, sources had said.

The National Company Law Appellate Tribunal (NCLAT) had clarified on June 10 that it did not bar lenders from voting against NBCC’s resolution plan. It also directed IRP to report the outcome of voting process directly to it. The NCLAT also advanced the date of next hearing to July 17 from July 2.

The exact percentage of votes in favour and against the NBCC’s takeover plan was not disclosed due to an insolvency court order.

The sources had said the bid possibly did not muster the requisite nod of two-third of lenders and buyers.

The voting result is to be placed before the NCLAT.

In most bankruptcy proceedings, lenders have the right to vote for or against a resolution plan for a debt-laden firm. In the case of realty firms, home buyers also have voting rights at par with lenders.

As many as 13 banks and over 23,000 homebuyers have voting rights in the CoC of Jaypee Infratech.

Homebuyers represent nearly 60 per cent of voting rights, while banks have the rest. For approval of any resolution plan, at least 66 per cent votes should be in favour.

Bankers had reservation with the NBCC’s bid because of certain concession sought by the state-owned firm related to future tax liabilities and approval from development authority YEIDA for transfer of land and Yamuna Expressway.

This is 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.

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. Later in October 2018, the IRP started the second round of bidding process.

Early last month, the CoC rejected Suraksha Realty’s bid. On May 30, the CoC decided to put on vote NBCC’s bid even as bankers had reservations against the proposal. The voting process, which started on May 31, concluded on June 10.

Last week, lenders filed a petition before the NCLAT to allow them to vote against NBCC’s bid in an ongoing insolvency process. They also pleaded that other options should be explored, including considering of other bids or initiating fresh expression of interest.

Adani group recently made an unsolicited and non-binding bid to acquire Jaypee Infratech.

As reported on Moneycontrol