4 May 2019: A very small upfront amount and perceived low value of land were the reasons for Jaypee Infratech (JIL) lenders voting against the revised bid of a consortium led by Suraksha Realty. Sources said banks and financial institutions will be deliberating on NBCC’s bid in the next meeting of the committee of creditors (CoC), scheduled on May 9.
They may even decide on inviting bid from Adani which has only put a request before the CoC to allow it to bid for the beleaguered firm.
Lenders to JIL outrightly rejected Suraksha’s revised resolution plan. Of their 40.65% voting share in the CoC, only 1.01% vote, by Jammu and Kashmir Bank, came in favour, while others chose to dissent. Lead banker IDBI, with an 18.01% voting share in the CoC, too, did not favour Surakha’s bid. The voting on Suraksha’s bid began on Tuesday and concluded on Friday.
Homebuyers have the majority (59.26%) share of voting in the CoC. A good majority of them (34.62%) did not take part in the process. However, majority of those who voted favoured Suraksha. As per a BSE filing, 22.46% were in favour while 2.19% were against the revised bid.
In the BSE filing, JIL informed, “Section 28 (3) of the Insolvency and Bankruptcy Code, 2016, stipulates that no action shall be approved by the CoC unless approved by a vote of 66% of the voting shares.
Since members representing 23.47% of the voting rights assented to the matter, the decision on the item stands rejected.”
The development drags JIL’s insolvency resolution process into uncertainty as the bid by the state-run company is still in a limbo, while, on the other hand, the 270-day limit ends on May 6. Lenders’ admitted claim stands at `9,783 crore while that of homebuyers’ stands at around `14,000 crore. Fixed deposit holders’ admitted claimed stands at `24 crore.
In its revised plan, Suraksha offered only `18.55 crore upfront to secured financial creditors (FCs) and `10.26 crore upfront payment to FD holders. It will also offer FCs `5,000 crore through a debt land swap deal. Suraksha also proposed to use the `750 crore, as per the Supreme Court directive, deposited by JIL’s parent Jaiprakash associates (JAL) to complete the housing projects.
Sources said FCs did not find much substance in Suraksha’s bid on account of a minuscule upfront payment. One of the sources said, “Suraksha is offering us almost nothing and this is considering the huge business opportunities along the expressway that connects India’s top tourist destination and is an upcoming business and industrial hub.
Even though NBCC’s offer is not on the table, it is much better than Suraksha’s. We are willing to consider it.”
Now, the creditors are waiting for ruling on the extension of the Corporate Insolvency Resolution Process (CIRP) by the Allahabad bench of the National Company Law Tribunal (NCLT) as the 270-day deadline ends on May 6. If the NCLT allows an extension, then the CoC can again start the process and invite fresh application from interested parties — NBCC and Adani group.