Jaypee Case: Company To Pay Back Creditors, Complete Stuck Projects In 3 Years
Reassuring 13 banks and over 20,000 homebuyers, Jaypee Infra has said that it will pay back all its creditors and work towards completing the pending projects in three year’s time. Jaypee Infra owes Rs 9,800 crores to 13 different banks and the angst of homebuyers has been the talk point of national media since the issue first came to light in August 2017. In what can bring some relief to home buyers, Jaypee has assured that it is looking at project completion by 2022.
Homebuyers against liquidation
Sometime back, homebuyers who had invested in debt-laden Jaypee Infratech's projects have now moved the Supreme Court (SC) seeking stoppage of liquidation of the beleaguered developer although the deadline for the corporate insolvency resolution process is over, as it would cause "irreparable loss" to thousands of home buyers. The SC is expected to hear the homebuyers' plea next week. According to the SC, the 270 days for completion of corporate insolvency resolution proceedings (CIRP) against Jaiprakash Associates Ltd (JAL), the holding company of JIL, under the Insolvency and Bankruptcy Code (IBC) have concluded on May 6. The SC has sought the centre’s intervention and asked for a proposal to resolve it. The SC bench comprising of justices AM Khanwilkar and Dinesh Maheshwari said that while the Insolvency and Bankruptcy Code doesn’t talk about it, the centre can do something to resolve such issues. The bench also noted that a uniform rule in such cases should be considered.
Earlier in March, state-owned NBCC had shown interest to monetise Jaypee's assets to begin work on the latter's incomplete projects. The company had also assured the homebuyers that it will deliver these projects in three years in case its bid to acquire the beleaguered developer is accepted. However, NBCC's bid was later rejected by the Committee of Creditors (CoC).
NBCC, along with Kotak Investment, Singapore-based Cube Highways and Suraksha group, were among the four shortlisted bidders that had submitted their plans to acquire Jaypee Infratech, which was undergoing insolvency proceedings in the National Company Law Tribunal (NCLT).
Centre Working On A Uniform Proposal To Resolve Jaypee Homebuyers’ Grievances
The Centre on July 11 told the Supreme Court (SC) that it was drafting a uniform proposal that would address grievances of homebuyers who had invested in Jaypee Infratech’s stalled projects. The apex court, on the other hand, said that it would jump in to safeguard the interests of 21,000 homebuyers in case the insolvency tribunal, with which the Jaypee insolvency case is pending, fails to resolve the issue. While making the observation, the SC Bench headed by Justices A M Khanwilkar and Dinesh Maheshwari, deferred the hearing for July 18.
The top court had on July 9 asked the Centre to come out with a "uniform" proposal for all cases, including Jaypee and Unitech, to resolve the difficulties being faced by lakhs of homebuyers who have not yet got possession of flats despite paying large sums of money to the developers.
The ongoing saga
Earlier, the Supreme Court (SC) disposed of homebuyers' applications against initiating insolvency proceedings against Jaypee Infratech and asked the NCLT to go ahead with company liquidation. It was in August last year that IDBI Bank moved the NCLT against the developer for non-payment of Rs 526 crore loan, following which buyers moved court.
After Anuj Jain, on September 18, was removed from being the Insolvency Resolution Professional of the company at the CoC, financial creditors of Jaypee have now, have voted online on six issues, including the appointment of a new resolution professional (RP). These stakeholders have also voted for a lower fee for the RP, acceptance of the resignations of seven independent directors and approval of Form G for an invitation for expression of interest.
It is important to note here that before an amendment was made in the Insolvency and Bankruptcy Code, 2016, homebuyers were at the end of the spectrum of financial creditors in case the company’s assets were liquidated, forcing them to take legal recourse. Homebuyers, who have been waiting for possession of their homes for over a decade now, took to the streets and to the internet to oppose company liquidation. When Parliament approved changes in the bankruptcy code and brought homebuyers on a similar footing to that of financial institutions some clarity did come their way.
Now, they are allowed to be a part of the Committee of Creditors (CoC) along with banks and financial institutions when the company assets are liquidated. This will help them get a refund of the money they invested in Jaypee projects.
Meanwhile, JAL is also headed towards the same fate as its realty arm. Private lender ICICI Bank has initiated insolvency proceedings against JAL over non-payment of Rs 1,200 crore. The Allahabad Bench of the National Company Law Tribunal (NCLT) has given a notice to the company in this regard.