Suraksha's bid to acquire Jaypee Infra fails after creditors reject offer

New Delhi: Financial creditors of Jaypee Infratech on Friday rejected Suraksha Realty's bid for the debt-laden firm as the offer was low on upfront cash payment and will meet on May 9 to discuss the future course of action, sources said.

Mumbai-based Suraksha group was the lone contender in the race to acquire Jaypee Infratech after the Committee of Creditors (CoC) rejected the bid of state-owned NBCC Ltd on the grounds that the offer did not have approval from various government departments.

NBCC wants its bid to be reconsidered, while Adani Group has also shown interest in acquiring Jaypee Infratech and completing over 20,000 delayed flats in Noida.

Interestingly, Jaypee Group's promoters too have put in a bid to retain control of the company.

Under the insolvency proceedings Friday, members representing 41.85 per cent of voting rights were against the proposal, while 23.47 per cent were in favour.

Most of those voting in favour were homebuyers, who hold about 60 per cent of the voting rights in the CoC.

The remaining around 34.69 per cent homebuyers abstained from the voting process, which started on April 30 and concluded on Friday.

"Section 28(3) of the Insolvency and Bankruptcy Code stipulates that 'No action shall be approved by the committee of creditors unless approved by a vote of 66 per cent of the voting shares'.

"Since the members representing 23.47 per cent of the voting rights assented to the matter, the decision on the item stands rejected," Jaypee Infratech's Interim Resolution Professional (IRP) Anuj Jain said in a statement.

The CoC will meet again on May 9 to decide the future course of action, sources said, even as the court-mandated deadline for completing the resolution process ends on May 6.

Lenders have sought extension of the deadline and the matter is pending before the Allahabad bench of the National Company Law Tribunal (NCLT).

IDBI Bank, India Infrastructure Finance Company, LIC, SBI, Corporation Bank, Bank of Maharashtra, Syndicate Bank, Union Bank, ICICI, IFCI, Axis Bank and SREI Equipment Finance voted against Suraksha's offer. Only J&K Bank voted in favour.

Among homebuyers, 8,019 people voted in favour, 860 against while 14,632 abstained.

Suraksha Realty had in this round offered lenders Rs 18.55 crore as upfront payment and land parcels worth Rs 5,000 crore to settle the debt. It also proposed to infuse Rs 3,000 crore capital to complete pending flats.

After its bid got rejected, NBCC Ltd got the necessary approvals from various government departments for its offer and has written to the IRP that its bid should be reconsidered on merit.

Last month, business conglomerate Adani Group too wrote to the IRP, expressing its interest to bid for Jaypee Infratech.

Jaypee Group's promoters too are keen to retain control over its realty arm and have already submitted their debt resolution plan under the Insolvency and Bankruptcy Code (IBC).

Meanwhile, the lead lender IDBI on April 29 approached the Allahabad bench of the NCLT seeking extension of insolvency proceedings beyond the May 6 deadline.

In 2017, Jaypee Infratech went into insolvency after the NCLT admitted the application by an IDBI

Bank-led consortium seeking resolution of the firm.

Jaypee Infratech, which is a subsidiary of Jaypee Group's flagship firm Jaiprakash Associates, owes nearly Rs 9,800 crore to financial creditors.

Anuj Jain was appointed as the IRP to oversee the affairs of the company and conduct the bidding process to find a buyer for Jaypee Infratech who can complete pending 20,000 flats in Noida, Uttar Pradesh.

During the first round of insolvency proceedings, the Rs 7,350 crore bid of Lakshdeep, part of Suraksha group, was rejected by lenders as it was found to be substantially lower than the company's net worth and assets as well as liquidation value of about Rs 14,000 crore.

In October 2018, the IRP started a fresh initiative to revive Jaypee Infratech on the NCLT's direction.

To protect lenders interest, NBCC has offered Rs 5,000 crore worth land as well as 100 per cent equity of Yamuna Expressway, the only cash generating asset with Jaypee Infratech.

Jaypee Group Chairman Manoj Gaur has promised to infuse Rs 2,000 crore to complete pending apartments over the next four years. The group had submitted a Rs 10,000-crore plan before lenders in April 2018 as well, but the same was not accepted.

Jaiprakash Associates Ltd (JAL) had submitted Rs 750 crore in the registry of the Supreme Court for the refund to buyers and the amount is lying with the NCLT.