The choice facing the Committee of Creditors (CoC) of the beleaguered Jaypee Infratech Ltd (JIL) today is reportedly between a haircut of Rs 230 crore and one of Rs 2,800 crore, and the ball will likely be passed to the Supreme Court.
On Monday, Jaypee Group promoter Manoj Gaur made a last-ditch attempt to retain control over Jaypee Infratech, which was dragged to bankruptcy court last year by an IDBI Bank-led consortium. According to people in the know, Gaur’s revised Rs 10,000 crore offer comprises a combination of cash, land parcels and equity to lenders through instruments, totalling more than JIL’s outstanding debt of Rs 9,800 crore.
Significantly, Gaur’s revised resolution plan is over 25 percent higher than the best bid Jaypee Infratech had received under the insolvency proceedings. A few weeks back, Lakshadweep Pvt Ltd, a joint venture between Sudhir Valia-led Suraksha Asset Reconstruction Company and Mumbai-based Dosti Reality, as emerged as the front-runner to acquire Jaypee Infratech with a bid of around Rs 7,350 crore. But plenty of disgruntlement followed since the Lakshadweep’s bid was far lower than JIL’s liquidation value pegged at Rs 15,000 crore.
According to The Business Standard, in the latest resolution plan submitted to the CoC and the resolution professional, Gaur proposed to pay JIL’s operational creditors around Rs 400 crore, offered homebuyers 2,000 equity shares each in JIL and promised possession of homes by 2021. Thousands of homebuyers are still awaiting their flats. Sources told the daily that a 50 per cent discount on stamp duty and free maintenance are also in the offing. Lakshadweep, on the other hand, sought a waiver where JIL’s operational creditors were concerned and has offered to give possession to the homebuyers only by 2024.
To remind you, back in 2007, the Jaypee group started the development of 32,000 flats and plots in its much hyped Noida township Wish Town, the bulk of which was to be built by Jaypee Infratech but it has only delivered 9,500 apartments so far.
The realty and infrastructure firm needs Rs 6,500 crore to construct the remaining flats, of which Rs 4,000 crore is receivables from customers. This means a shortfall of Rs 2,500 crore. But as sources have previously pointed out, Jaypee Infratech currently boasts assets worth about Rs 24,000 crore, including land parcels, Yamuna Expressway and a hospital that can be monetised to protect the interest of creditors, home buyers as well as minority shareholders.
Incidentally, as directed by the Supreme Court, the Jaypee Group has already submitted Rs 650 crore in the court registry of the Supreme Court in order to protect the interest of homebuyers. It has reportedly been asked to deposit another Rs 100 crore by May 10.
As things stand, the Lakshadweep bid is unlikely to be approved by Jaypee Infratech’s CoC and the Jaypee promoter’s resolution plan will likely require the apex court’s approval. Meanwhile, the clock is ticking down to the 270-day deadline specified for bankruptcy resolution under the Insolvency and Bankruptcy Code, which is May 12. The apex court will reportedly meet on May 11, before breaking for summer vacation, but it is unlikely to reach a decision on JIL’s fate so soon.
The stock exchange has sought clarification from JIL regarding this revival plan but a response in still awaited. In the meantime, JIL’s stock rallied 5 per cent this morning before continuing to trade flat at Rs 5.92 apiece.
