Jaypee Infratech creditors to meet on June 20 to decide future course

Jaypee Infratech's creditors, which include banks and home buyers, will meet on June 20 to assess the progress of the ongoing insolvency process and decide future course of action.

The meeting has been called days after majority of banks voted against state-owned NBCC's bid to acquire the debt ridden realty firm. A meeting of Committee of Creditors (CoC) will be held on June 20, 2019, Jaypee Infratech's Interim Resolution Professional (IRP) Anuj Jain said in a regulatory filing. He did not disclose the agenda of the meeting.

Sources, however, said that the CoC has been called to discuss the status update of the ongoing insolvency proceedings and the way forward. A majority of lenders voted against NBCC's bid on June 10 but most home buyers wanted the state-owned company to takeover the debt-laden realty firm, sources had said.

The National Company Law Appellate Tribunal (NCLAT) had clarified on June 10 that it did not bar lenders from voting against NBCC's resolution plan. It also directed IRP to report the outcome of voting process directly to it. The NCLAT also advanced the date of next hearing to July 17 from July 2.

The exact percentage of votes in favour and against the NBCC's takeover plan was not disclosed due to an insolvency court order. The sources had said the bid possibly did not muster the requisite nod of two-third of lenders and buyers. The voting result is to be placed before the NCLAT.

In most bankruptcy proceedings, lenders have the right to vote for or against a resolution plan for a debt-laden firm. In the case of realty firms, home buyers also have voting rights at par with lenders. As many as 13 banks and over 23,000 homebuyers have voting rights in the CoC of Jaypee Infratech.

Homebuyers represent nearly 60 per cent of voting rights, while banks have the rest. For approval of any resolution plan, at least 66 per cent votes should be in favour. Bankers had reservation with the NBCC's bid because of certain concession sought by the state-owned firm related to future tax liabilities and approval from development authority YEIDA for transfer of land and Yamuna Expressway.

This is the second round of bidding process to revive Jaypee Infratech, which went into insolvency in August 2017 after the National Company Law Tribunal (NCLT) admitted an application filed by an IDBI Bank-led consortium.

In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. Later in October 2018, the IRP started the second round of bidding process. Early last month, the CoC rejected Suraksha Realty's bid. On May 30, the CoC decided to put on vote NBCC's bid even as bankers had reservations against the proposal. The voting process, which started on May 31, concluded on June 10.

Last week, lenders filed a petition before the NCLAT to allow them to vote against NBCC's bid in an ongoing insolvency process. They also pleaded that other options should be explored, including considering of other bids or initiating fresh expression of interest. Adani group recently made an unsolicited and non-binding bid to acquire Jaypee Infratech.