The Swiss challenge auction sparked by NARCL’s Rs 3,570 crore offer for the Rs 9,234 crore debt held by nine public sector lenders has allowed it to match the winning bid and take over. Next month, state-owned financial institutions that provided loans to Jaypee Infratech will be able to recover their funds. According to the Economic Times, however, 24,000 homeowners, holders of fixed deposits, and private lenders will have to wait until the bankruptcy court approves the winning bidder’s resolution plan.
This is because the government-sponsored National Asset Reconstruction Company (NARCL) has promised only to acquire loans held by public sector banks (PSB) for Jaypee Infratech. Homebuyers, holders of fixed deposits, and private banks make up 62% of the recognized claims against distressed real estate developers. In response to NARCL’s offer of Rs 3,570 crore for the Rs 9,234 crore of debt held by nine public sector lenders, a Swiss challenge auction has been launched.
On October 10, lenders led by IDBI Bank issued a bid document to Asset Reconstruction Companies (ARCs) inviting expressions of interest and announcing an auction on October 27.NARCL can take over the debt and match the winning bid.
Jaypee Infratech Ltd. (JIL) stated in a regulatory filing that the listing of the matter of the resolution plan, along with related pleas, is listed for consideration before the National Company Law Tribunal, Principal Bench, New Delhi, on March 7 and March 9. This is in connection with the approval of the Suraksha group’s bid to acquire debt-ridden realty firm Jaypee Infratech Ltd.
Suraksha Group, based in Mumbai, received approval from financial creditors and homebuyers to take over the JIL in June of last year. This raised hopes for approximately 20,000 homebuyers to take possession of their dream flats.
After a 10-day voting process, the Suraksha group received approval from the committee of creditors (CoC) to acquire JIL. With 98.66% of the vote, the Suraksha group prevailed, with 0.12 percent more votes than NBCC. In the CoC, 12 banks and over 20,000 homebuyers each hold voting rights, with homebuyers holding 56.63 percent and creditors holding 43.25 percent.
Voting rights for holders of fixed deposits are 0.13 percent. The bid process to find a buyer for JIL, which entered the corporate insolvency resolution process (CIRP) in August 2017, is in its fourth round.JIL’s interim resolution professional (IRP) is Anuj Jain. A claim for Rs 9,783 crore has been made by lenders. Suraksha Group had offered bankers nearly Rs 1,300 crore through the issuance of non-convertible debentures in its final resolution plan.
Anuj Jain, Jaypee Infratech’s interim resolution professional (IRP), submitted the Suraksha Group resolution plan to the tribunal for approval in July 2021. The tribunal has postponed the hearing on the case nearly 80 times since then, according to filings with the stock exchange.”The plight of homebuyers who have already waited for over 10 years to get possession of their homes indicates the judicial delay of more than a year to get the plan approved,” a real estate consultant told ET. Lenders would receive a 39% recovery under NARCL’s proposal. If all claimants receive the same offer of 39% recovery, the NARCL’s offer would be Rs 9,345 crore.
Additionally, it has proposed finishing all pending apartments within the next four years. In August 2017, JIL entered the insolvency process after the NCLT accepted an IDBI Bank-led consortium’s application. Lenders turned down Lakshadweep’s Rs 7,350 billion bid, which was part of the Suraksha group, in the first round of the insolvency proceeding. In the second round, which took place in May-June 2019, Suraksha and NBCC’s bids were turned down by the CoC. In November 2019, the Supreme Court ordered that only NBCC and Suraksha should be invited to submit revised bids.
During the third round of the bidding process, in December 2019, the CoC approved the resolution plan of NBCC with a vote of 97.36 percent in favor. The NCLT granted NBCC approval to acquire JIL in March 2020. The order, on the other hand, was challenged before the NCLAT and the Supreme Court later on.
On March 24, 2021, the Supreme Court mandated a new round of bidding between the NBCC and the Suraksha group alone. There are claims worth Rs 24,211 crore that the IRP has accepted. ET heard from lenders that the NARCL offer is more appealing than the winning bid.” We will receive 15% of the consideration amount upfront, and we will not need to wait until the court approves the plan,” a lender stated.
