FE: Insolvency process: Manoj Gaur offers to clear Jaypee Infra dues of Rs 8,358 crore

20 February 2019: In a last-ditch effort to regain control of the insolvent Jaypee Infratech (JIL), its erstwhile promoter Manoj Gaur has offered to clear dues of financial creditors totalling Rs 8,358 crore out of their admitted claim of Rs 9,783 crore. The amount of Rs 8,358 crore does not include the interest component of  Rs 1,425 crore, on which he has sought a waiver.

The proposal, submitted on February 15, also promises to pay fixed-deposit holders within 90 days of the approval of the offer of settlement. It also hopes to complete the real estate project in four years. Gaur has proposed to pay `412 crore to the operational creditors.

Sources, however, said Gaur’s proposal will not be discussed in the next meeting of the committee of creditors (CoC), scheduled on March 1. As per section 12 A of the Insolvency and Bankruptcy Code (IBC), the applicant can withdraw the insolvency case if 90% of the lenders and homebuyres vote in favour of Gaur’s latest offer.

Gaur has proposed to make an upfront payment of `1,500 crore to the financial creditors and another `2,000 crore, on a later date after raising the amount through convertible debentures. These apart, he intends to swap debt with land with lenders amounting to `4,858 crore.

The CoC of Jaypee Infratech had met on February 18, in which bids from state-run NBCC and Sudhir Valia-promoted Suraksha ARC were discussed.

Sources said NBCC’s bid is better than that of Surakha. NBCC has promised to pay the entire due to the financial creditors initially through an upfront payment of `1,000 crore. On a later date, it would pay `3,000 crore through a land swap deal and the remaining `5,782 crore by giving the lenders 100% stake in the expressway SPV.

Suraksha, on the other hand, has offered to pay `10 crore upfront to the financial creditors and `5,000 crore via swapping debt with land. It would not pay anything to the operational creditors.

However, NBCC has offered to infuse `500 crore to complete the real estate project in four years. Suraksha has also offered to complete the projects in four years, but it would infuse `3,000 crore towards working capital requirements. Manoj Gaur also intends to complete the project in four years and would infuse `1,500 crore for the same.

Lenders to JIL have already approved the proposed evaluation matrix of the bids and the process for request for resolution plan through electronic voting. The National Company Law Tribunal (NCLT) had on August 9, 2017, admitted IDBI Bank’s plea for initiation of the corporate insolvency resolution process (CIRP) against JIL for defaulting on a `526-crore loan. However, a resolution eluded the firm within the stipulated timeframe as lenders were not happy with “too low” bids.

On a writ petition filed by homebuyers, the Supreme Court on August 9, 2018, directed JIL’s resolution professional Anuj Jain “to follow provisions of the insolvency code afresh in all aspects”.

Noting that liquidation of Jaypee would serve no purpose for homebuyers, financial institutions or the promoters, the apex court, exercising power under Article 142 of the Constitution, extended the insolvency process of Jaypee for another 180 days.

Earlier, Lakshdeep, Adani Group and a joint venture between Kotak Investment Advisors and Cube Highways had submitted the resolution plans. Consequently, Sudhir Valia-promoted Suraksha ARC had emerged as the front-runner to acquire JIL. However, in May 2018, lenders to JIL had rejected the `7,350-crore bid by Suraksha as they found it “too low”.

According to a note prepared by IDBI Bank, Jaypee’s largest lender, the company’s actual value stands at `17,111 crore, while its distress value is pegged at `14,548 crore. JIL has `9,000-crore outstanding to various banks.

JIL’s assets include 25,000 apartments that are under construction and 3,000 acre of land parcels, mostly along with the expressway.



Categories: General News, India Bankruptcy

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