18 February 2019: Lenders of Jaypee Infratech met on February 18 to discuss the resolution plans submitted by two shortlisted bidders – state-owned NBCC and construction company Suraksha Asset Reconstruction Company – to take over the realty firm and complete stalled projects, some of which have been delayed by over a decade.
The Committee of Creditors (CoC) has recommended that a forensic audit of the company’s accounts be conducted as per the demand of homebuyers, sources told Moneycontrol.
“Both bids were presented to COC and negotiations are likely to commence soon. One of them will eventually be shortlisted and would be put to vote by March-end. The COC also agreed to put to vote homebuyers’ request for a forensic audit. It would be put to vote next week between Wednesday (February 27) and Saturday (March 2),” the source said.
At the meeting, interim resolution professional Anuj Jain provided a status update on the resolution process.
A request from authorised representatives of the homebuyers for conducting a fresh forensic audit was also heard. Homebuyers were represented by Kuldip Verma.
Presentations were made by the two bidders before Jaypee’s financial creditors that includes homebuyers. According to a source, NBCC is ahead in the race to acquire Jaypee Infratech under the insolvency resolution plan. The government’s construction arm had reportedly filed a higher financial bid compared to what Suraksha Asset Reconstruction Company has bid, which were opened on February 16.
According to sources, NBCC has offered Rs 1,000 crore upfront to lenders and Rs 2,150 crore to homebuyers. It has offered Rs 3,000 crore in land deals to lenders, and said that the projects would be completed in four years.
In a filing to the BSE on February 15, NBCC said last week that it has submitted the bid to Interim Resolution Professional Anuj Jain. “Resolution Plan in respect of Jaypee Infratech has been submitted by the NBCC to the Interim Resolution Professional on 15th February, 2019,” the filing said.
Apart from the housing project, Jaypee Infratech owns Taj Expressway and Japyee Hospital. The expressway generates revenues in toll charges.
Interestingly, Suraksha ARC is believed to have offered Rs 10 crore upfront to banks, with Rs 3,000 crore earmarked for homebuyers. It has proposed to repay loans worth Rs 5,000 crore through a debt-asset swap. It plans to complete construction of flats in three years, with over half the remaining apartments (around 20,000) to be handed over the next two years.
In May 2018, Suraksha’s Rs 7,350-crore bid for Jaypee was rejected for being below liquidation value.
The final resolution could take close to a month as lenders will rate the two bidders’ plans on several parameters, including cash flow of the companies, real estate competency, net worth and project turnaround capability.
In the CoC meeting held on January 17, financial creditors and homebuyers of Jaypee Infratech had extended the deadline for shortlisted bidders to submit proposals to revive the realty firm to February 15.
The committee also approved the extension of Corporate Insolvency Resolution Process (CIRP) for 90 days with a voting percentage of over 71 percent. In January, it had approved the evaluation criteria to be adopted to select a bidder for taking over the realty firm.
The National Company Law Tribunal (NCLT) had on August 10, 2017, admitted IDBI Bank’s plea to initiate insolvency proceedings against the JIL for defaulting on Rs 526-crore loan. While admitting the plea of IDBI Bank, the NCLT had appointed Anuj Jain as IRP to manage the company’s business.