Financial creditors of Jaypee Infratech Ltd (JIL) chose Mumbai-based Suraksha group over state-owned NBCC to take over the insolvent company on Wednesday, raising optimism that thousands of homeowners may finally receive possession of their apartments after years of delay. Wednesday afternoon marked the conclusion of a ten-day voting period on the takeover proposals made by NBCC and Suraksha group. Suraksha group received 98.66 percent of the vote, compared to NBCC’s 98.54 percent.
This was the fourth round of bidding to find a buyer for JIL, which entered CIRP in August 2017. “The Suraksha group won the offer with 98.66 percent of the vote,” Anuj Jain, JIL’s Interim Resolution Professional (IRP), told PTI. It received 0.12% more votes than NBCC, he added. JIL’s IRP later disclosed the outcome of the vote via stock exchange filings.
Suraksha group received 41.91 percent of the vote from 12 banks out of a total voting right of 43.25 percent, while NBCC received 41.79 percent of the vote from institutional financial creditors with claims totaling Rs 9,783 crore. All banks, with the exception of ICICI Bank, which received 1.34 percent of the votes, voted in favour of the Suraksha group.
Two lenders — ICICI Bank and Srei Equipment Finance Ltd — voted against NBCC’s bid (0.12 per cent voting share). Suraksha and NBCC received the whole 56.62 percent and 0.13 percent of votes, respectively, from homebuyers and FD holders. A successful resolution of the JIL will bring significant relief to over 20,000 purchasers across the developer’s different housing projects in Noida and Greater Noida (Uttar Pradesh).
At the Committee of Creditors, up to 12 banks and more than 20,000 homebuyers have voting rights (CoC). A bid must receive at least 66 percent of the vote to be approved. Following acceptance of the CoC, the Suraksha group’s bid must be approved by the National Company Law Tribunal (NCLT).
Meanwhile, a representative for the Suraksha group expressed gratitude to the IRP and CoC for conducting an impartial investigation. “We remain dedicated to purchasers and ensure them that all phases of development will be hastened, resulting in faster deliveries as stated in our resolution plan,” the spokeswoman added. Suraksha group has provided banks about 2,500 acres of land and over Rs 1,300 crore in non-convertible debentures as part of its final resolution plan.
It has stated that it will complete the building of pending units within 42 months. On June 10, the CoC voted to bring the final resolution proposals of Suraksha Realty Ltd, Lakshdeep Investments and Finance (the Suraksha group), and NBCC for acquiring the JIL under the Insolvency and Bankruptcy Code to a vote (IBC). However, there was considerable drama and blame game preceding that.
On May 20, the CoC decided to vote on just Suraksha group’s proposal for JIL from May 24 and rejected NBCC’s bid due to non-compliance with certain provisions pertaining to dissenting financial creditors. In a letter to lenders and the IRP, the public sector corporation expressed strong opposition to its offer being rejected.
As a result, a meeting of the CoC was convened on short notice on May 24 and it was decided to postpone voting on Suraksha’s request. NBCC and Suraksha were granted more time to submit amended and final bids following a voting procedure held on May 27-28.
Later in the June 10th meeting, the CoC resolved to put both the NBCC and Suraksha group bids to vote concurrently. JIL entered the insolvency process in August 2017 following the NCLT’s admission of an application by a consortium led by IDBI Bank.
Lenders rejected Lakshadweep’s Rs 7,350-crore proposal in the first round of insolvency proceedings. Suraksha Realty and NBCC’s bids were rejected by the CoC in the second round held in May-June 2019. The case was appealed to the National Company Law Appellate Tribunal (NCLAT) and ultimately to the Supreme Court. The Supreme Court decided in November 2019 that updated proposals be accepted exclusively from NBCC and Suraksha.
Then, in December 2019, the CoC voted 97.36 percent in favour of NBCC’s resolution proposal during the third phase of the bidding process. NBCC received approval from the NCLT to buy JIL in March 2020. However, the order was appealed to the NCLAT and then to the Supreme Court, which ruled on March 24 this year that only NBCC and Suraksha should submit new bids.
Image: https://unsplash.com/@mkunsplash84
Bhoi Smrutirekha Dharanidhar