31 May 2019: Lenders to insolvent Jaypee Infratech (JIL) on Thursday decided to put to vote state-run NBCC’s revised bid for the debt-laden realty firm. The exercise will go on for 10 days from Friday in which apart from 13 banks, over 23,000 homebuyers too will cast their votes via electronic mode.
Homebuyers and banks have voting shares of 59.26% and 40.65%, respectively, in the committee of creditors (CoC).
As per Section 28(3) of the Insolvency and Bankruptcy Code, a 66% vote is required for the CoC to approve a resolution plan. However, since it is difficult to get a section of homebuyers to take part in the voting process — Suraksha Realty bid, for instance, could not be approved by the CoC as a third of the homebuyers did not vote — it is uncertain if the NBCC bid would pass muster in CoC.
IDBI is the lead banker having an 18.01% voting share.
Sources said though JIL lenders laid out fresh conditions for accepting the NBCC bid — they, among other things, demanded an additional 500 acre under the debt-asset swap plan — , NBCC did not modify its bid.
“NBCC refused to sweeten its bid. However, the lenders still decided to go for voting on NBCC’s bid in line with the direction of the court (NCLAT). NBCC has put exactly the same bid,” said a source present in the meeting.
Sources added that even as Adani group had submitted a non-binding offer on May 28 for acquiring JIL, lenders did not discuss the proposal in their meeting on Thursday since “it was not on the agenda”.
The National Company Law Appellate Tribunal (NCLAT) had on May 17 asked the CoC to renegotiate with NBCC till May 30 and start fresh voting from May 31. The appellate tribunal had also said that it would be open to the CoC to approve the plan, but in case the CoC was not inclined to accept the plan, it would not pass any order of rejection without prior permission of the NCLAT.
NBCC’s latest bid for the insolvent firm includes infusion of Rs 200-crore equity capital, transfer of 950 acres of land worth Rs 5,000 crore as well as Yamuna Expressway to banks and completion of flats by July 2023 in order to settle an outstanding claim of Rs 23,723 crore of financial creditors, including banks and homebuyers.
Through its May 28 letter, lenders had asked NBCC to “reinstate 1,426 acres of land” from 950 acres offered earlier to the secured financial creditors under the debt asset swap plan. The lenders also demanded that the land parcel be made available to secured financial creditors on a pro-rata basis.
Lenders have also asked NBCC to bear any income tax, GST liability or corporate tax liabilities which may arise in future on account of transfer of land parcels. These would not be borne by the secured financial creditors. It also asked NBCC to get necessary nod from the income tax authorities for implementation of the bid if the relief sought by the public sector firm for any future tax liability is not approved by the adjudicating authority.
In 2017, Jaypee Infratech went into insolvency process after the National Company Law Tribunal (NCLT) admitted an application by an IDBI Bank-led consortium seeking revival of the realty firm. In the first round of insolvency proceedings conducted last year, the `7,350-crore bid of Lakshdeep, part of the Suraksha Group, was rejected by lenders.
Later in October 2018, the IRP started the second round of bidding process to revive JIL on the NCLT’s direction. JIL’s CoC had earlier this year rejected a bid by Mumbai-based Suraksha Realty through a voting process.