Jaypee Infra creditors board to NBCC: Drop conditions, then we'll talk

In a clear message to NBCC (India), formerly known as National Buildings Construction Corporation, the committee of creditors (CoC) of the beleaguered Jaypee Infratech (JIL) projects on Thursday indicated that the state-owned infrastructure giant should remove conditions around its proposal if it hopes to win the bid, sources said.

The CoC met on Thursday to discuss NBCC’s revised offer after it rejected the bid of Mumbai-based Suraksha Realty on May 3 through a voting under the insolvency proceedings. The creditors’ panel will meet again on May 14 to further discuss the revised bid of NBCC.

According to sources, in the almost two-hour-long discussion, the CoC spoke about the various conditions or exit clauses set by NBCC. “It wants to know if NBCC plans to stick to the conditions. If that is the case, then the CoC might not award the bid to it. However, a lot depends upon what happens on May 14,” said a source at the meeting.

Earlier Anuj Jain, the interim resolution professional in a letter to the CoC, had categorically said that the state-run infrastructure firm’s proposal is conditional and based on being granted relief from income-tax (I-T) liabilities. This mail had formed the basis of the decision CoC took on Thursday, sources said.

On May 1, NBCC had forwarded to the interim resolution professional a copy of a letter from the Ministry of Housing and Urban Development, granting approval to submit the resolution plan for JIL. NBCC further confirmed to the interim resolution professional by email that all administrative approvals have been received and the clause be treated as withdrawn.

“Please note that the process note dated December 27, 2018, approved by the CoC, provides that the resolution plan should be binding and non-conditional. In the CoC meeting, the interim resolution professional informed that the NBCC-revised resolution plan is conditional, as it has stated that the plan will not be binding unless key relief is granted. During the CoC meeting, NBCC reiterated these and other conditions in the plan,” Jain said in his email reviewed by Business Standard.

NBCC was also asked how it will fund the takeover of JIL, sources said, adding the NBCC officials answered all the queries. It was decided in the meeting that lenders will send a written query to NBCC by Friday and the public sector firm would reply by May 13.

Lenders and homebuyers would meet again on May 14 to continue the discussion. On May 3, creditors had rejected the bid of Suraksha Realty, which was the lone contender left after NBCC’s offer was rejected on technical grounds like non-approval of government departments as well as non-binding terms and conditions.

After the rejection of its bid on April 26 by the CoC, NBCC received the requisite approvals from the government departments, including the Ministry of Housing and Urban Affairs.

Jain has written to the CoC that NBCC’s revised bid is conditional as the state-owned firm has stated that the plan will not be binding on it unless key relief measures such as extinguishing of I-T liability and a dispensation from seeking consent of Yamuna Expressway Industrial Development Authority (YEIDA) for any business transfer is granted, sources had said. It has also demanded extinguishing an estimated I-T liability of Rs 33,000 crore over a period of 30 years arising out of the transfer of land parcels from YEIDA to Jaypee Group.