Jaypee Infratech insolvency: NCLAT says banks can vote against NBCC proposal

The National Company Law Appellate Tribunal Monday clarified that it has not barred lenders of Jaypee Infratech from voting against NBCC's proposal to acquire the debt-laden realty firm. Hearing a batch of applications filed by banks seeking permission to vote against NBCC bid, the the National Company Law Appellate Tribunal (NCLAT) also directed Interim Resolution Professional (IRP) Anuj Jain to report the outcome of voting process directly to it.

On May 30, the Committee of Creditors (CoC) of Jaypee Infratech had decided to put on vote NBCC's bid even as bankers had reservations against the proposal, due to certain conditions and concessions put forward by the state-owned firm. The voting process started on May 31, and will conclude Monday (June 10). As many as 13 banks and 23,000 homebuyers have voting rights in the CoC. Homebuyers represent nearly 60 per cent of voting rights, while banks have the rest.

Last week, lenders filed a petition before the NCLAT to allow them to vote against NBCC's bid in an ongoing insolvency process, A three-member bench headed by Chairman Justice S J Mukhopadhaya directed that the voting process should be completed.

"As the voting is on and is likely to be completed today by five pm. We are not inclined to pass any order," said NCLAT in its order. During the proceedings, senior advocate Salman Khurshid, who was representing the lenders, informed NCLAT about the conditions put by NBCC in the resolution plan.

On this, NCLAT said: "We have not said do not vote against. We have said the CoC may not file final report on the decision, if it is rejected." In their plea, lenders sought that secured financial creditors should be permitted to vote against NBCC's resolution plan or bid. They also pleaded that the IRP and the CoC should be allowed to explore other alternatives, like inviting fresh expression of interest and considering bids that already have been submitted by other companies.

Adani group recently made an unsolicited and non-binding bid to acquire Jaypee Infratech. Without taking the name of Adani, the NCLAT said that NBCC was a government company and asked about the experience of the private firm.

During the hearing, the appellate tribunal also clarified that votes of the absentees would not be counted in the total voting percentage. "We make it clear that if any of the financial creditors remain absent in voting, their voting percentage shall not be counted for the purpose of counting voting share in terms of decision already passed by this appellate tribunal," said NCLAT.

It also directed the resolution professional to report about the outcome of the order directly to it, instead of Allahabad bench of NCLT, which is supervising insolvency resolution process of Jaypee Infratech. "In terms or earlier order May 17 and May 19, Resolution Professional instead of placing before the adjudicating authority (NCLT), must place matter before appellate tribunal for further orders."

The NCLAT also pre-poned its next hearing to July 2 from July 17. During the proceedings, NCLAT told the lenders that the process must go on as stake of 23,000 flat buyers are concerned.

"Today, it is premature but the voting must go on," NCLAT said, adding "it is not going to finish the company." According to him, the intent was the maximisation of the assets.

The appellate tribunal told bankers that Jaypee Infratech is not the owner of the land and has taken it on on lease from the Yamuna Expressway Industrial Development Authority (YEIDA). "We want a resolution. Some how it should come," NCLAT observed.

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 and the process is still ongoing.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)