Jaypee Infratech Insolvency: NBCC Fights Back After Rejected Bid
Government-owned NBCC Ltd. is proposing to clarify provisions of its bid for insolvent Jaypee Infratech Ltd, while questioning the resolution professional’s conduct.
On May 20, creditors to Jaypee Infratech decided to proceed with voting on the resolution plan submitted by Suraksha Asset Reconstruction Company Ltd, after deeming that NBCC’s plan was non-compliant with provisions of the Insolvency and Bankruptcy Code. On Friday, Jaypee Infratech informed stock exchanges that the creditors would vote on Suraksha ARC’s plan between May 24 and May 27.
In a letter dated May 22, written to resolution professional Anuj Jain, NBCC said that it would provide clarifications to the issues raised by creditors. But it also questioned the RP’s decision to label NBCC’s bid as non-compliant with provisions of the IBC.
“We would like to emphasise that such statement is not tenable under the provisions of the Insolvency and Bankruptcy Code, 2016(“the Code”) and various regulations issued thereunder,” NBCC said in its letter, a copy of which has been reviewed by BloombergQuint.
Jain declined to comment.
The government-owned construction company said that the RP’s role is that of an enabler and that Jain is not in a position to decide on compliance issues related to the bid. NBCC cited a previous Supreme Court judgement in the Essar Steel insolvency case, where the judiciary had held that a resolution professional is not empowered to “decide” whether a plan does or does not contravene provisions of the IBC.
“It is apparent from the above that by declaring the NBCC plan as non-compliant, you have exceeded the jurisdiction beyond what is laid down by the Supreme Court,” NBCC said in its letter to Jain.
According to the bidder, Jain’s statement that NBCC’s plan is non-compliant is only a difference of view. NBCC has claimed that Jain’s interpretation of its plan for payment to dissenting creditors is wrong and arbitrary.
“Succinctly put your stand is that your interpretation of law is absolute and therefore no other interpretation is possible which leads to a situation where a valid resolution plan may not be put to vote,” NBCC said in its letter to Jain.
The letter went on to say that NBCC can address all the concerns raised by Jain and the committee of creditors, in time before the voting process begins. The bidder also said that it reserves the right to seek legal recourse as and when necessary.
According to minutes of the meeting from May 21, a copy of which has been reviewed by BloombergQuint, Jain asked the committee of creditors to decide on whether they wanted to proceed with Suraksha ARC’s bid for voting, give NBCC more time submit a revised plan or if both bidders should be given more time to submit revised plans again.
“The lenders replied that they shall not be able to consider NBCC plan in the current voting process as currently, they are evaluating only Suraksha plan. Hence, there was no agreement or direction from CoC in this matter,” the minutes say.
The Jaypee Infratech resolution process started in 2017 when the Reserve Bank of India shortlisted it as one of the 12 companies for immediate admission under the IBC. Over the years it has seen multiple rounds of bidding and legal challenges.
In the last round, while the creditors had voted in favour of implementing a plan by NBCC, the Supreme Court rejected it. The apex court called for fresh bids to be submitted by both NBCC and Suraksha ARC, and for creditors to decide on a final plan within 45 days. While the Supreme Court mandated deadline has been breached, the process is now entering the final phase of resolution again.