Invites expressions of interest from firms with net worth of over Rs 1,000 crore to invest Rs 2,000 crore
The National Company Law Tribunal (NCLT)-appointed insolvency resolution professional (IRP) for Jaypee Infratech, Anuj Jain, has invited companies, including real estate firms, with a net worth of over Rs 1,000 crore to complete the delayed projects of Jaypee Infratech, including Noida’s Wish Town project, by infusing Rs 2,000 crore or more. The IRP has invited expressions of interest from interested parties with the capital and ability to get the project executed either directly or through joint ventures to submit a resolution plan of Jaypee Infratech in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016, by November 7. “Expression of Interest (EOI) are hereby invited from the parties interested in submitting a plan for resolution of JIL in accordance with the provisions of IBC (Insolvency and Bankruptcy Code),” Jain said in an advertisement published in newspapers.
On Wednesday, the Supreme Court had rejected parent Jaiprakash Associates’ (JAL) proposal to “hive off” its multi-crore Yamuna Expressway toll asset rights to generate Rs 2,000 crore that it is supposed to deposit to cover part of its subsidiary Jaypee Infratech’s liability towards 32,000 homebuyers. However, it gave JAL time till November 5 to deposit the money, without further modifying or recalling its earlier September 11 order. The next hearing in the case is on November 13. Jain has also asked the companies to ensure protection of homebuyers’ interests by timely construction and hand over possession of flats. The companies submitting their EOIs have been asked to submit their financial statements for the past three years, ownership details and proof of address along with their applications.
Under Section 25 of the IBC, it is the duty of a resolution professional to invite prospective lenders, investors and any other persons to put forward resolution plans once the information memorandum is ready. Therefore, this notice of the IRP inviting expressions of interest from interested parties, including real estate companies, to construct and deliver 22,000 flats is a part of compliance under the IBC. Homebuyers have expressed doubts whether any developer or big companies would put up a resolution plan. “I will be very surprised if any real estate company comes forward to construct those 22,000 flats in a timely manner. Any interested real estate company would make a bid only if there is a promise of return on such investment. This will require an infusion of capital close to Rs 5,000 crore and not just Rs 2,000 crore. Also, there is minimal chance of making any profit because most homebuyers have already paid around 85-90% of their apartment cost to Jaypee Infratech,” said Abhishek Dubey, a Delhi-based corporate lawyer and also a Jaypee flat buyer.
Dubey has also blamed the Uttar Pradesh government and suggested that the state should step in and offer land free of cost through Yamuna Expressway Industrial Development Authority and Noida Authority to the incoming investor in consideration of construction of the apartments. “Only then there is some hope of any relief to homebuyers,” Dubey said. About 32,000 homebuyers were left in the lurch after the Allahabad bench of the NCLT on August 9 classified Jaypee Infratech as insolvent on the petition filed by IDBI Bank under Section 7 of IBC. Jaypee had defaulted on a Rs 526-crore loan by the bank. The NCLT appointed IRP Jain as CEO of Jaypee Infratech and gave him six months to revive the company. This period can be extended by another three months.