11 June 2019: In an order that came as a relief to homebuyers favouring an NBCC takeover of the insolvency-hit Jaypee Infratech Ltd, the National Company Law Appellate Tribunal (NCLAT) on Monday clarified that votes of those absent at committee of creditors (CoC) meetings, including banks and financial institutions, would no longer be factored into the total voting percentage.
CoC meetings are held to vote for insolvency resolution, but so far, they have not been able to garner the minimum percentage of votes needed (66%) for the resolution to pass. Absentee votes have been a major factor in this as these would be automatically considered as ‘no’ votes, impeding the resolution process. “We make it clear that if any of the financial creditors remains absent from voting, their voting percentage should not be counted for the purpose of counting the voting share, as held by this Appellate Tribunal in Tata Steel Ltd vs Liberty House Group,’’ the order stated.
In that judgment, the tribunal had ordered, “We hold that only members of the committee of creditors who attend the meeting directly or through video conferencing can exercise voting powers after considering the other requirements…’’
This implies that the universe of voters will reduce to those who are present and have voted on the resolution instead of all the eligible votes at the CoC. In Jaypee Infratech’s case, even if around 15,000 homebuyers of the 23,000 vote in favour of state-run NBCC’s offer, chances of it constituting more than 50% of votes brighten. It is learnt that total number of homebuyers who voted in the latest CoC is between 14,500 and 15,000. The voting by homebuyers on the NBCC’s offer to acquire the company, which was started on May 31, ended on Monday.
Thirteen banks have also voting rights constituting, 40.7% of the vote share. The rest is held by homebuyers.
NCLAT on Monday also clarified that it had never barred lenders of Jaypee Infratech from voting against NBCC’s proposal to acquire the beleaguered Jaypee Infratech. A three-member bench directed the voting process should be completed. However, it directed the interim resolution professional to report the outcome of the voting directly to it, instead of the Allahabad bench of the NCLAT, which is supervising the insolvency resolution process of Jaypee Infratech.
NCLAT also made it clear it is in favour of a resolution and advanced the date of its next hearing to July 2 from July 17.