22 May 2019: On May 17, the National Company Law Appellate Tribunal (NCLAT) directed JIL’s CoC to renegotiate with NBCC on the revised bid by May 30 and then start afresh the voting a day later, from May 31.
Agreeing to negotiate on its revised bid for Jaypee Infratech (JIL), state-run NBCC has in a communication to the lenders emphasised that even though the revised resolution plan complies with IBC norms and is “feasible and viable”, the company is ready to discuss the reliefs and concessions with JIL’s committee of creditors (CoC).
Sources said the public sector undertaking was responding to a letter from the legal advisor to bankers and financial institutions, Cyril Amarchand Mangaldas (CAM). The legal advisor had written a letter on May 18 to NBCC stating its reservations on the relief and concessions sought by the company in its bid.
On May 17, the National Company Law Appellate Tribunal (NCLAT) directed JIL’s CoC to renegotiate with NBCC on the revised bid by May 30 and then start afresh the voting a day later, from May 31. NBCC in its response inquired whether the reservation on reliefs and concessions raised in the letter is only from the banks and financial institutions (secured financial creditors) or from the entire CoC.
“We are of the view that NCLAT has directed for negotiations between CoC and us and it would be most suitable for an effective negotiation of the resolution plan, especially in view of stringent timelines, consolidated views of the CoC (including home buyers) may be shared with us,” NBCC said in the letter, which was seen by FE.
On reliefs and concessions, it said, “We also wanted to emphasise that based on inter-alia our detailed diligence, discussions (internal and external) and, in particular, considering the peculiar circumstances faced by JIL, we are of the opinion that the resolution plan is in compliance with the IBC and the regulation there under, and is feasible and viable in its present form”.
NBCC, however, urged CAM to schedule meetings for deliberating on the issues. CAM in its letter to NBCC raised the issue of extinguishment of future tax liabilities by the income tax department for 30 years due to the transfer of land by Yamuna Expressway Industrial Development Authority (YEIDA) to JIL.
“They are of the view that NCLT has previously held that any statutory approvals required for implementation of a resolution plan should be taken up by the resolution applicant with the concerned statutory authority. Accordingly, they want that either NBCC remove it or assure that it will not withdraw if relief is not granted,” one of the source said.
Another problem area is YEIDA’s approval on concession agreements. NBCC wants that an approval by adjudicating authority should mean automatic approval to transfer Yamuna Expressway and all related rights and obligation to the Expressway SPV. Besides, it would also means transfer of land worth `5,001 crore to the Land Bank SPV, said the same source.
“Lenders said IBC does not provide unilateral modification of contracts entered into by corporate debtor. Besides, YEIDA has already stated that rights under concession agreements are non-transferable. Lenders want to approach YEIDA along with NBCC to obtain necessary approvals,” he added.
Another issue with NBCC’s revised resolution plan is that it compels secured financial creditors to purchase all or some of the unsold housing units at the resolution applicant’s discretion, which the lenders wants to be done away with.
“Lenders also said that they are at a disadvantage as NBCC is only bringing in `200 crore (as equity investment) and will be utilising existing assets to control projects. They want NBCC to address this issue,” the source said. Another contention is that NBCC’s bids states banks and financial institutions will have to bear any income tax or GST (Goods and Services Tax) or corporate tax liability from transfer of land under the debt asset swap structure, which they want to be removed.