Finance Ministry Says NBCC Didn’t Need Approval For Jaypee Infratech Bid  

NBCC (India) Ltd., which was awaiting government approvals for its bid for Jaypee Infratech Ltd., now wants to be considered even as the committee of creditors has started voting on another offer.

The state-run developer received approvals from the Department of Investment and Public Asset Management and the ministries of finance and housing and urban affairs, it said in a May 1 exchange filing. On April 29, NBCC had written to the resolution professional that it's still interested in bidding for Jaypee Infratech.

NBCC has now asked the resolution professional how to proceed with the resolution process, two people aware of the development said on the condition of anonymity. Homebuyers too have received a note from their representative on the CoC about it, the first person said.

The resolution professional is, however, of the view that NBCC's plan cannot be considered for now since the voting procedure has already begun, the people said. If the Suraksha Asset Reconstruction Company Ltd.'s bid does not get the 66 percent voting threshold, the committee of creditors might consider voting on the NBCC plan, they said. Still, the lenders are likely to meet this week to take the final call.

The confusion over government approvals arose when NBCC, after submitting its bid on April 26, asked the CoC not to put its plan to vote since it awaited approvals from the government.

But the Ministry of Finance, in a letter, clarified that since NBCC is a ‘Navratna', it did not need the government's nod to bid under the Insolvency and Bankruptcy Code— BloombergQuint has reviewed a copy of the letter. The NBCC's proposed investment of Rs 200 crore in Jaypee Infratech is about 15 percent of its net worth, the ministry's April 30 letter said. That does not violate any internal limits set by the government and allows NBCC to invest in projects without seeking prior approval, it said.

But as NBCC asked to put its bid on hold, the CoC including representatives of 25,000 homebuyers decided to start voting on Suraksha ARC's offer on April 30. The voting ends on May 3.

Jaypee Infratech is one of the 12 large corporate accounts shortlisted for insolvency proceedings by the Reserve Bank of India in June 2017. One round of insolvency proceedings against the company ended in August 2018, with no bidder receiving lender approvals.

The company was headed for liquidation but the Supreme Court intervened, saying that the rights of the homebuyers, who are yet to get possession of their apartments, were being trampled upon since they had no voice in the resolution process. The apex court then ordered to start insolvency proceedings from scratch, and gave flat-owners 58 percent of the votes in the CoC.

The 270-day resolution period for the company's second round of insolvency ends on May 6. If no bid is selected, Jaypee Infratech may head for liquidation again.