Jaypee IRP invites EOI from parties with networth of Rs 1,000 crore to submit resolution plan by November 7

The National Company Law Tribunal (NCLT) appointed insolvency resolution professional (IRP) Anuj Jain has invited expression of interest (EOI) from parties interested in submitting a plan for resolution of Jaypee Infratech Limited (JIL) in accordance with the provisions of the Insolvency and Bankruptcy Code 2016 by November 7, 2017.

The IRP has set the following criteria for applicants:

# The party to be shortlisted for submitting a plan should be a body corporate with a minimum net worth of Rs 1000 crore (share capital and free reserves) as on March 31, 2017 (at Group level), according to an advertisement that has appeared in a leading business daily today.

# For investment companies/fund houses, minimum assets under management (or committed funds available) should be Rs 1000 crore or more.

# The party must have the commitment to satisfy the mandatory requirements of resolution plan and its regulations, the timelines, the process for resolution provided under the IBC, it said.

# The body corporate should also have the ability to execute real estate projects either directly or through joint ventures, contractors etc through a resolution plan to be sanctioned under IBC and it should have the ability to invest Rs 2000 crore or more to complete the construction of the flats.

# It should have good financial health and repute and should protect the interests of homebuyers generally, and in particular by timely construction and possession of flats, it said.

# It should also declare if the party is related to JIL.

"The IBC casts a duty on the resolution professional (RP) to invite prospective investors to submit resolution plans after he has prepared the information memorandum. As the information memorandum of JIL is ready the RP has issued a call to the serious investors to submit their expression of interest. RP will shortlist serious and competent parties and invite them to submit resolution plan. The EOI clearly states that interested investor will have to protect the interest of home buyers generally and more particularly by timely construction and delivery of flats. As the Supreme Court is hearing the matter the outcome of EOI will be subject to orders that may be passed by the Court," says Sumant Batra, an insolvency lawyer representing the IRP Anuj Jain.

Real estate experts expressed doubts whether any developer or big companies would come forward to put forward a resolution plan.

"The IBC requires the resolution professional to invite proposals from prospective lenders, investors and any other persons to put forward resolution plans. So this appears more like a compliance with the provisions of IBC. I would be very surprised if any real estate company comes forward to construct those 22,000 flats in a timely manner. That would require an infusion of capital close to Rs 5000 Crore and a slim chance of making any profit because home buyers have already paid close 90 percent of their apartment cost to JIL." Abhishek Dubey who is a lawyer based out of Delhi and also a Jaypee Flat buyer.

Experts say that no regional player has the wherewithal to take over the entire project. It may eventually have to be divided into parts and smaller developers invited to complete the projects.

Real estate sources also express doubts whether any entity would want to participate in the bid because of the magnitude of the project and huge financial and legal liability involved. “There are issues with homebuyers, bankers, vendors and even farmers. Why would any private entity want to take on such a huge liability,” they say. Ultimately, the government may have to set up an expert group to analyse the situation and arrive at a solution, they add.

The National Company Law Tribunal (NCLT) admitted IDBI’s plea for initiating insolvency proceedings against Jaypee Infratech for defaulting on a Rs 526-crore loan. NCLT appointed insolvency professional Anuj Jain as CEO of Jaypee Infratech. Jain has been given six months to revive the company. This period can be extendable by another three months.

The Supreme Court this week refused permission to embattled Jaiprakash Associates Ltd, the parent company, to hive-off the rights of multi-crore six-lane Yamuna Expressway connecting Greater Noida with Agra in Uttar Pradesh. The apex court, however, extended the time from October 27 to November 5 for the company to deposit Rs 2000 crore.

The apex court had on September 11 directed Jaypee Associates, the parent company of Jaypee Infratech, to take prior approval of the court if it wished to sell any asset or property to raise funds to the tune of Rs 2,000 crore to be deposited by it in the apex court registry by October 27 to pay off the troubled home buyers.

The apex court while hearing a plea of home buyers of Jaypee's Wish Town project at Noida in Uttar Pradesh challenging the insolvency proceedings initiated against Jaypee Infratech, had restricted the directors of the firm from leaving the country.