A car drives past signage for the Jaypee Greens Wish Town Noida Integrated City as residential buildings stand under construction in the project in Noida, Uttar Pradesh. (Photographer: Prashanth Vishwanathan/Bloomberg)

Jaypee Infratech’s Insolvency Proceedings Enter The Endgame

Two potential bidders — Suraksha Asset Reconstruction Company Ltd. and NBCC Ltd. — have submitted final resolution plans in the second round of insolvency proceedings for Jaypee Infratech Ltd., two people familiar with the matter told BloombergQuint on condition of anonymity.

A third interested party — Adani Infrastructure & Developers Pvt Ltd. — which had submitted a late expression of interest for Jaypee Infratech this month was not allowed to submit a final resolution plan, one of the people quoted above said.

The deadline to submit resolution plans ended on Wednesday. The committee of creditors for the construction company will now assess these revised bids and is scheduled to meet next on Saturday.

The 270-day deadline for resolution set under the Insolvency and Bankruptcy Code will end on April 30.

Emails were sent to Suraksha, NBCC and the Adani Group on Wednesday evening. The story will be updated with any response from them.

What Are Bidders Offering?

Suraksha ARC, which did not get enough votes from the committee of creditors when resolution plans were first called for, has bid much lower, according to the second person quoted above.

In the first round, Suraksha was willing to offer Rs 2,000 crore upfront repayment to lenders. It is now offering only Rs 50 crore. The bidder has offered to clear all construction work and has asked homebuyers to continue paying their dues based on certain pre-decided milestones. Suraksha has also sought a portion of the proceeds from the monetisation of 858 acres of land owned by Jaypee Infratech, to help it complete construction.

NBCC is offering Rs 500 crore as upfront repayment to lenders. It has also asked lenders to extend some portion of the sale proceeds received from the company’s land parcels for completion of pending residential projects. The government owned builder is willing to take on additional debt of Rs 1,500 crore to meet the shortfall between construction cost and the receivables from homebuyers.

Separately, Jaypee Group promoter, Manoj Gaur, held a meeting with representatives of homebuyers earlier this month, where he promised to complete the construction work within three years if allowed to retain control of the group. Gaur has asked home owners for full payment of dues upfront to help complete construction. He has proposed an oversight committee with independent experts to oversee construction.

Gaur has discussed these proposals with home owners outside the formal bidding process.

The Voting Conundrum

Jaypee Infratech’s insolvency proceedings has seen many twists and turns since it was first admitted under the IBC in 2017.

Suraksha ARC, which was earlier the only bidder, failed to garner enough votes in its favour. Following this, Anuj Jain, the resolution professional for Jaypee Infratech filed a motion to take the company to liquidation. The Supreme Court intervened in the matter. To protect the interest of homebuyers, the Supreme Court allowed the resolution process to restart in August 2018.

The apex court also allowed homebuyers to have representation on the committee of creditors, since their dues far exceeded the amount of money due to lenders. Homebuyers now control 58 percent of the votes in the committee. Lenders and some fixed deposit holders hold the rest of the votes.

Since then, lenders and homebuyers have approached the Allahabad bench of the National Company Law Tribunal to seek clarity on the voting structure since the committee of creditors is now fractured and reaching the minimum vote needed to approve a plan may be difficult. The case was transferred to the New Delhi bench, which has sought responses from the Ministry of Corporate Affairs and the Insolvency and Bankruptcy Board of India on the matter.

The case is still being heard, with the next hearing being scheduled on April 30.