Hope For Jaypee Infratech Homebuyers As Final Bids Are Submitted

Nearly 22,000 buyers can now hope to get their homes after bidders submitted their final resolution plans for the debt-laden Jaypee Infratech Ltd. as the two-year-old insolvency process for the developer nears a close.

State-run NBCC (India) Ltd. and Suraksha Realty Ltd. submitted their bids in the Supreme Court-monitored resolution process. Both the plans offer to complete under-construction homes and repay fixed deposit holders in full, besides paying a part of the dues to financial creditors.

BloombergQuint has reviewed the resolution plans by NBCC (India), and Suraksha Realty and Lakshdeep Investments and Finance Pvt. Ltd.

Jaypee Infratech, which owes lenders more than Rs 9,780 crore and operational creditors Rs 464.2 crore, had left homebuyers in the lurch as it struggled to complete homes. That prompted the central bank to include it in the first 12 large corporate accounts referred for resolution under the Insolvency and Bankruptcy Code in June 2017.

The insolvency petition was admitted in August 2017 by the Allahabad bench of the National Company Law Tribunal, but no resolution plan was approved in the first 270-day deadline, pushing the company towards liquidation.

The Supreme Court, however, ordered fresh bidding and included homebuyers in the Committee of Creditors. The court later ordered to start the process afresh twice and on Nov. 6 this year, directed that the insolvency process should be completed within 90 days.

The claims admitted by interim resolution professional Anuj Jain, in lieu of homebuyers, amount to Rs 13,349 crore, according to regulatory disclosures made by the resolution professional. Also, Jaypee Infratech owes around Rs 28 crore to fixed deposit holders.

Over the next two days, starting Wednesday, the homebuyers will vote on whether to approve the final resolution plans submitted by Suraksha Realty and NBCC, a homebuyer said on the condition of anonymity. Thereafter, the committee of creditors, including bankers and homebuyers of Jaypee Infratech, will vote on the respective resolution plans to decide the best offer and highest bidder, this person said.

Homebuyers, according to regulatory disclosures, constitute nearly 57.8 percent of the vote in the committee of creditors. The winning bid will need at least 66 percent of the votes.

What NBCC Is Offering

• Revised resolution plan envisages repaying institutional financial creditors in full—around Rs 9,782.6 crore. All homebuyers will be provided flats for which they paid and fixed deposit holders will be repaid Rs 28 crore.
• Of the Rs 87 crore worth refunds sought by homebuyers, NBCC will pay Rs 62.4 crore.
• Operational creditors will be repaid only Rs 20 crore against admitted claims of Rs 464.2 crore.

The structure proposed by NBCC includes:

• Setting up an NBCC special purpose vehicle, which will acquire a majority stake in Jaypee Infratech.
• The SPV will infuse up to Rs 120 crore (partly debt and equity) to acquire 100 percent of the corporate debtor.
• Over time additional funds will be infused by the resolution applicant, depending on the construction requirements.
• Jaypee Infratech will incorporate a new SPV under its existing structure and shall transfer all the rights and obligations of the Yamuna Expressway project to this SPV, which will repay lenders over time by securitising the projects' cash-flow receivables.
• The debtor will create a land bank SPV and transfer 1,526 acres of land worth Rs 5,000 crore to it. This land bank SPV will be taken over by the financial creditors of the corporate debtor, through an equity share issue.
• Jaypee Healthcare Ltd., a subsidiary of Jaypee Infratech, will be sold off to a third-party buyer as part of the resolution plan.
• NBCC said it will complete the construction of homes within 42 months against 48 months earlier. It also proposed to extend the concession agreement of the Yamuna Expressway by 10 years.

What Suraksha Realty Is Offering

• Financial creditors will receive Rs 175 crore upfront against only Rs 25 crore as per earlier plan.
• Suraksha will securitise 2,200 acres of land worth over Rs 9,600 crore to the lenders against Rs 1,900 crore for 300 acres earlier. This land swap will be structured through debt instruments.
• Assure homebuyers they will receive their completed flats in three years, with more than 60 percent of units to be delivered in two years.
• Will create a trust with Rs 250 crore for the welfare of homebuyers and will offer to pay a compensation of Rs 10 per square feet in case of a delay of more than nine months from the proposed timeline.
• Will set aside two 250-acre land parcels in Mirzapur and Tappal in Uttar Pradesh towards a trust in favour of homebuyers as a gesture of good will in case the projects are not completed in the given timeline.
• The company will infuse Rs 25 crore worth of equity capital into Jaypee Infratech, in addition to lending Rs 250 crore.
• Additionally, it will infuse Rs 2,000 crore as working capital to complete the pending construction of residential projects and Yamuna Expressway. This loan will be provided by Standard Chartered Bank for which the foreign lender will have exclusive charges on the cash flows of the expressway project.
• It's offering a personal guarantee of the guarantor, a pledge of 100 percent equity shares of the borrower and a corporate guarantee of the acquirer as part of the loan structure.
• The plan envisages no payment towards operational creditors who have around Rs 464 crore worth of claims, while fixed deposit holders will be paid in full.
• JSW Group provided a letter of support to Suraksha Realty and will help in the turnaround of the corporate debtor as part of the resolution plan.