Jaypee Infratech insolvency case: Manoj Gaur's offer a futile exercise, say lenders

Lenders have dismissed Jaypee Infratech promoters plea to allow them to bid for the debt laden company through a one time settlement because the Supreme Court has clearly narrowed down the choice between Suraksha Asset Reconstruction Co and NBCC.
Moreover, home buyers who constitute a majority of the debt are unlikely to support a bid from the very builder which delayed the construction in the first place people familiar with the negotiations said. This offer is too little too late and must not be given importance, they said.

Manoj Gaur, executive chairman of Jaiprakash Associates, the promoter company of bankrupt Jaypee Infratech wrote to lenders earlier this week offering to settle the company's Rs 10,000 crore dues to financial creditors in full. However, in a meeting of committee of creditor on Monday lenders refused to give any importance to the letter.

"They have written many letters and this is the latest. The CoC was made aware of the letter but no one took it seriously because there is no way they can enter the process now. Surpeme Court (SC) has clearly said that the choice is between Suraksha and NBCC so this letter has no importance now," said a person aware of the deliberations.
Jaypee Infratech resolution has dragged on for four years after being admitted in 2017.

Suraksha ARC and government owned NBCC India had submitted a revised resolution plan on the direction of the SC after the previous highest bid by NBCC did not pass muster with the apex court because NBCC had considered Rs 750 crore deposited by Jaypee promoter Jaiprakash Associates with the court as part of the plan.

Lenders said the already delayed process is unlikely to be halted to give Gaur a chance.

"First of all being a defaulting promoter Gaur is barred from submitting a plan under section 29A. Even if he tries under sector 12A to settle the claim he needs 90% or more votes from all creditors which is unlikely because the homebuyers which constitute the majority will not be in favour of the move as they are already suffering due to the delays caused by the same company," said a second person involved in the negotiations.

Homebuyers’ claims amount to Rs 12,714 crore giving them a 55% share of the debt and hence a majority vote. Lenders are led by IDBI Bank and also include ICICI Bank, IFCI and SBI.

Lenders are keen to complete the long pending resolution which has seen multiple rounds of bidding and cases going up to the SC.

However, the limited amount of cash offered by both bidders and the huge amount of land which is part of both resolution plans has made lenders wary. Both the bidders have offered the 2000 acres of land the company possess around Noida where the project is situated.

The key to the resolution plan is the home buyers who have been given the designation of financial creditors in the project. These 20,000 home buyers together hold 55% of the debt and are keen to see their completed flats and will go with whoever promises faster and hassle free possession.