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Suraksha ARC seeks “fair & unbiased” process in Jaypee Infra insolvency

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Suraksha Asset Reconstruction Company, one of the two bidders for Jaypee Infratech under the insolvency procedure, has called upon the troubled real estate developer’s creditors and insolvency resolution professional (IRP) to follow a “fair and unbiased process”, a day before they meet to consider the resolution proposals.

The Mumbai-based ARC has also requested the IRP and members of the committee of creditors to ensure the resolution plan submitted by its rival bidder

is compliant with the Insolvency and Bankruptcy Code (IBC) as interpreted by the Supreme Court in its March 24 judgment before CoC takes up the resolution plans for voting and evaluation.

The CoC meeting is scheduled on Thursday and voting will be on for a week. Suraksha and NBCC submitted their proposals to the IRP on Tuesday. In its letter to the IRP and lenders, Suraksha highlighting NBCC’s alleged failure to comply with the stipulated deadline and the need to comply with the code with regards to payment to dissenting lenders. “Some lenders had tried to postpone the submission deadline following NBCC’s request even after three extensions were granted,” a CoC member told ET, indicating a lack of consensus over extension.

According to a fair market valuation report, Suraksha has offered Rs 6,984 crore to lenders, while NBCC has offered Rs 5,248 crore. Suraksha has also offered land worth Rs 400 crore to homebuyers in stuck Jaypee Infratech projects to compensate for past delays. Both have proposed to complete the stuck projects in 42 months. This is the fourth time both the entities have revised their proposals.

In its letter to the IRP and creditors, Suraksha said, “We wish to also bring to your notice that any inclusion of third-party securities in determination of liquidation value of the corporate debtor, especially pertaining to treatment of dissenting financial creditors, shall apparently be in violation of the code, which needs to be evaluated by you while ascertaining the compliance of any resolution plan with the provisions of the code and other applicable laws.”

ET has seen a copy of the letter. In its revised plan, NBCC has proposed to offer non-convertible debentures worth Rs 2,000 crore and or land to dissenting financial creditors in the event of the entire liquidation value payable to them is not realised from enforcement of security interest. As per the Supreme Court judgment on March 24, a bidder can only offer cash or allow to enforce its existing exclusive security interest.

NBCC has also offered assenting lenders 85% ownership of Yamuna Expressway SPV, which will be raising up to Rs 4,200 crore. This will include Rs 2,000 crore in fresh debt, Rs 2,000 crore through issue on non-convertible debentures (NCDs) to dissenting financial creditors and Rs 200 crore through Jaypee Infra Ltd (JIL) NCDs. This will make assenting lenders effective borrowers. Suraksha Group has proposed to raise Rs 3,000 crore as working capital within 90 days, while NBCC has stated a plan to raise Rs 2,000 crore without specifying any timeframe.

NBCC has offered to make payment to homebuyers who are seeking refund in four years and Suraksha has proposed to repay them in 18 months. Around 20,000 homebuyers were left in the lurch in 2017 when the Allahabad bench of the National Company Law Tribunal admitted the application of an IDBI Bank-led consortium seeking resolution of Jaypee Infratech’s debt under IBC.

The company has debt obligation of over Rs 9,800 crore to creditors. Homebuyers’ claims amount to Rs 12,714 crore. The admitted financial debt out of the total claims filed by the creditors is Rs 22,613 crore.

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