Jaypee insolvency: Lenders put five conditions to NBCC for considering bid

Lenders of Jaypee Infratech have asked state-owned NBCC to sweeten its bid to acquire the debt-laden realty firm and have demanded that the public sector firm should offer 1,426 acre land instead of 950 acre besides taking onus of getting approvals from income tax and development authorities.

As per the direction of the National Company Law Appellate Tribunal (NCLAT), lenders are negotiating with the NBCC on the latter's bid to acquire Jaypee Infratech and complete stuck housing projects comprising over 20,000 units.

The IDBI-led lenders' consortium has written to NBCC that its bid would be considered "favourably" if the public sector firm meets its five conditions. The letter was written to NBCC on Monday, two days before the meeting of the committee of creditors (CoC).

"The resolution plan should reinstate 1,426 acres of land that was earlier offered to the secured financial creditors under the debt asset swap," law firm Cyril Amarchand Mangaldas has written on behalf of lenders consortium comprising 13 banks.

The land parcel should be made available to secured financial creditors pro-rata to their debt, it added.

NBCC should undertake to get the requisite approval from Yamuna Express Industrial Development Authority (YEIDA) if the "deemed approval" from YEIDA as proposed in the bid for transfer of Yamuna Expressway and land to special purpose vehicles (SPVs) are not approved by the adjudicating authority, the letter said.

Lenders have also put a condition that NBCC should also undertake to get necessary nod from the Income Tax authorities for implementation of the bid if the relief sought by the public sector firm for any future tax liability is not approved by the adjudicating authority.

The creditors would consider providing financial assistance to NBCC in respect of unsold flats, provided such assistance is guaranteed by the centre.

"Any income tax liability or GST liability or corporate tax liability which arises in future on account of transfer of land parcels, the same shall be borne by the resolution applicant and not by the secured financial creditors," the letter said.

The CoC will meet on May 30 to discuss NBCC's bid. As many as 13 banks and 23,000 homebuyers have voting rights in the committee.

Earlier this month, the CoC rejected a bid by Mumbai-based Suraksha Realty through a voting process. Later, the panel decided to put on vote NBCC's offer even as bankers were opposed to this move citing certain conditions in the resolution plan submitted by the public sector firm.

On the bankers' plea, the NCLAT had on May 17 annulled voting by homebuyers and lenders on NBCC's bid and allowed renegotiation on the offer by May 30. The voting process could start from May 31.

Sources had earlier said that NBCC was unlikely to dilute certain conditions, including exemption from future tax liability, mentioned in its bid, but the public sector firm was open to negotiating on the offer related to unsold flats.

Lenders have shown reluctance to acquire up to 2,207 unsold flats worth Rs 1,756 crore as proposed by NBCC in its revised offer.

In its latest offer, NBCC had proposed infusion of Rs 200 crore equity capital, transfer of 950 acres of land worth Rs 5,000 crore as well as Yamuna Expressway to banks and completion of flats by July 2023 in order to settle an outstanding claim of Rs 23,723 crore of financial creditors, including banks and home buyers.

On this bid, lenders had reservations on certain relief and concessions sought by NBCC and had sought clarifications from the firm.

However, NBCC decided not to dilute the conditions of exemption from future income tax liability as well as from taking consent of development authorities for transfer of businesses, including land parcels and Yamuna Expressway.

Clarifications from the NBCC were sought in the wake of Jaypee Infratech's Interim Resolution Professional (IRP) Anuj Jain flagging to the lenders that the state-owned firm's bid was conditional and non-binding because of conditions like extinguishing of tax liability and exemption from seeking YEIDA consent for any business transfer.

In 2017, Jaypee Infratech went into insolvency process after the National Company Law Tribunal (NCLT) admitted an application by an IDBI Bank-led consortium seeking revival of the realty firm.

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.

Later in October 2018, the IRP started the second round of bidding process to revive Jaypee Infratech on the NCLT's direction.