NCLAT allows 90 day extension in Jaypee Infra CIRP, allows fresh bids

Appellate tribunal bars Jaypee Infra parent firm from submitting fresh bids

The National Company Law Appellate Tribunal (NCLAT) on Tuesday extended the Corporate Insolvency Resolution Period (CIRP) of Jaypee Infratech for 90 days--a period during which fresh bids for the company can be submitted.

Forty-five days will be used to finalise new bids and the rest to cure any discrepancies in the bids chosen by the Resolution Professional (RP).

A two-judge Bench led by Chairperson Justice S J Mukhopadhaya said that all old bids, including that of NBCC India, will stand invalid. The new bidders, including Adani Infrastructure and Development and NBCC, if they choose to submit fresh plans, will be free to do so in accordance with the law. Jaypee Associates Limited, the parent company of Jaypee Infratech, would however be ineligible to submit fresh bids, the two judge Bench said.

The lenders to Jaypee Infratech had approached the NCLAT seeking to exclude the period of nearly 260 days, starting September 17, 2018, from the CIRP process as this was the time taken by National Company Law Tribunal (NCLT) to decide on the voting rights of homebuyers.

Following an application moved by the homebuyers, a two-member bench of NCLT had given split opinion on whether homebuyers in the Jaypee Infratech case should be considered a part of the CoC and whether they should be construed as one or a be segmented class-wise, for computation of voting share. The application, initially moved in September 2018, was finally decided when a reference bench agreed with one of the members’ findings via an order on June 4 this year.

Jaypee was taken to the NCLT by an IDBI Bank-led consortium for failing to repay debt worth nearly Rs 24,000 crore. In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. In October 2018, the RP of the company started a second round of bidding to revive Jaypee.

Though state-owned NBCC had submitted a bid to complete the pending projects of Jaypee Infratech, the plan was rejected by the lenders to the company. Of the total votes polled on NBCC’s plan, nearly 34.75 per cent of homebuyers had voted in favour, while 1.44 per cent had voted against. As much as 23.8 per cent of the homebuyers had abstained from the voting process, the resolution professional told the NCLAT. The homebuyers comprise 59 per cent of the Committee of Creditors (CoC) of Jaypee.

The 13 banks comprising the other 40.75 per cent of the CoC had voted against the NBCC’s bid, the resolution professional had told the NCLAT. Voting on NBCC’s bid for Jaypee had started on May 31 and ended on June 10.