Residential and commercial buildings stand in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

NBCC Yet To Get Approvals, Asks Jaypee Infratech Lenders Not To Vote On Bid

NBCC Ltd. has asked lenders to insolvent Jaypee Infratech Ltd. not to put its bid to vote as the state-run developer still awaits approval from relevant ministries, according to two people in direct knowledge of the development.

The committee of creditors met with NBCC and Suraksha Asset Reconstruction Company Ltd. to discuss the revised bids they had submitted on Wednesday, the people said on the condition of anonymity as the talks are still private. After both the bidders made their presentations, the CoC asked them if they could put the bids up for vote to find the highest bidder at the earliest, the people said.

But NBCC informed the creditors that it’s yet to receive approvals from the Department of Investment and Public Asset Management, and ministries of finance, and housing and urban affairs for this bid.

The creditors of Jaypee Infratech, the developer that has left thousands of homebuyers in the lurch, are rushing to complete the proceedings since the 270-day period mandated under the Insolvency and Bankruptcy Code ends on May 7. The lenders had sought to start voting by April 30 and complete the necessary paperwork by May 6, so an application could be made to the National Company Law Tribunal immediately after that.

With NBCC not being able to secure final approvals, homebuyers are considering the possibility of voting for Suraksha ARC to quickly close the process. BloombergQuint earlier reported that the homebuyers, also considered financial creditors with representation on the CoC, were in favour of NBCC’s bid since it’s a government-owned company and would be more accountable.

NBCC Yet To Get Approvals, Asks Jaypee Infratech Lenders Not To Vote On Bid

NBCC’s spokesperson didn’t respond to calls and emails on Friday. The story will be updated once the company responds.

NBCC, in its bid, has proposed that secured lenders should buy the unsold homes in the under-construction projects and provide funds to complete them. The lenders could sell these in the open market and make an upside on their investment, the builder said.

Jaypee Infratech has about 2,200 unsold homes across its residential projects and NBCC assessed their value to be a little over Rs 1,700 crore.

Apart from this, NBCC would bring in Rs 500 crore of its own funds as upfront payment to banks. It also proposed that Yamuna Expressway be hived off into a special purpose vehicle and about Rs 1,500 crore of Jaypee Infratech’s debt be transferred to the SPV. Lenders can securitise the toll earnings from the expressway to settle this debt.

Suraksha ARC has offered Rs 50 crore upfront and agreed to borrow Rs 3,000 crore from the market to complete the projects.

This is the second time that Jaypee Infratech’s insolvency proceedings are close to the 270-day deadline and a firm bidder has not yet been finalised. In the previous round, lenders had rejected a resolution plan submitted by Suraksha ARC, which pushed the developer towards liquidation. But the Supreme Court had intervened in August 2018 and restarted insolvency proceedings. The apex court also appointed representatives of 25,000 homebuyers on the CoC since they stood to lose the most if the company went into liquidation.