Can Jaypee Infratech ‘resolution’ be derailed, again?
As the euphoria around ‘resolution’ of the corporate insolvency resolution process of Jaypee Infratech finally settles down, it is time for a reality check. Can the hard-fought ‘resolution’ that took almost six years be derailed, again? At least the prior experience says so.
This is not the first time Jaypee Infratech CIRP saw a resolution – in 2020 NCLT had approved the resolution plan of NBCC after the CoC had voted in favour of the same. However, the NCLT order was challenged in National Company Appellate Tribunal (NCLAT) and later in the Supreme Court, which in March 2021 order fresh bids from both Suraksha and NBCC.
And now that the NCLT has once again given nod the resolution plan submitted jointly by Suraksha Realty Limited and Lakshdeep Investments and Finance Private Limited, some experts still fear the repeat of what happened with the NBCC resolution plan.
Sanjeev Ahuja, an insolvency professional who acted as authorised representative of homebuyers in Jaypee Infratech case, expresses this fear in a LinkedIn post.
“NBCC was the first contender getting its approval for the plan so submitted, only to be rejected by SC as non-compliant… The initial euphoria of Homebuyers was short lived.” Says Ahuja.
He pointed out that this time around NCLT had approved the plan by Suraksha, after rejecting objections of operational creditor Yamuna Expressway Industrial Development Authority (YEIDA) and a dissenting financial creditor ICICI Bank.
“Would this go all the way to SC again? Well, learnings from the past tell us, it may, because the objections are from institutions who are systems at work, are guided accordingly to not take the blame for not doing their bit to recover the maximum, in spite of the proven/settled law and recognition to the commercial wisdom of COC,” he said in his post.
The NCLT pronounced its order on 7 March 2023 approving the resolution plan of Suraksha Reality Limited and Lakshdeep Investments and Finance Private Limited in respect of Jaypee Infratech Limited (JIL).
As per the resolution plan of Suraksha and Lakshdeep Investments, the financial creditors would receive Rs 1,280 crore and lands worth Rs 6,457 crore (Fair Market Value).
Objection of ICICI Bank and YEIDA
ICICI Bank had objected to the resolution plan on the ground that the payment provided to it in the plan fails to satisfy the liquidation value, as mandatorily provided under Section 30(2)(b) of the Code and to the Judgment passed by the Supreme Court in the Jaypee Kensington.
ICICI Bank is a Secured Financial Creditor to Jaypee Infratech with a claim of Rs. 304.1 crores and 1.31% of the voting share in the Committee of Creditors. The individual liquidation value of ICICI Bank’s claim is Rs. 218 Crores against its admitted claim of Rs. 304 Crore.
However, it being the dissenting financial creditor, ICICI Bank gets land parcel against its dues. The grievance of the ICICI Bank is that it was not given an opportunity to select property of its own choice, for enforcing the security interest.
The YEIDA has mainly raised objections to the treatment meted out in the Resolution Plan to its claims of Rs 6,112 crore. The resolution professional had only admitted Rs 461 crore of the total submitted claims and the under the resolution plan by Suraksha, YEIDA gets only Rs 20 lakh.
Also Read: No end to Jaypee Infratech CIRP as NBCC submits revised bid
