August 9, 2018:
On Thursday, Supreme Court ordered that Insolvency case of Jaypee Infratech be returned to National Company Law Tribunal (NCLT), and the entire process, including bidding for asset, be restarted.
This follows Amendment of the Insolvency and Bankruptcy Code (IBC), in June 2018, bringing homebuyers on a par with financial creditors. Though the amendments are not retrospectively applicable, in this case they will be according to the Supreme Court orders.
According to sources, Homebuyers’ dues in the case are about Rs 99 billion; Jaypee owes bankers Rs 100 billion. Of the 35,000 units booked by homebuyers in Jaypee’s housing projects, 20,000 are yet to be completed.
“Now the committee of creditors (CoC) will be controlled by the home-buyers, as their dues will be equal to the bankers put together,” said Nilesh Sharma, senior partner at Dhir and Dhir Associates.
Experts said resolution applicants will have to present a plan to take care of the interest of home-buyers and bankers, or pay all dissenting creditors upfront. The IBC states that such creditors must be paid the liquidation value, which in Jaypee’s case, is Rs 70 billion.
Those close to the resolution professionals said since the groundwork for the case was already been done, it would not be a problem to find a resolution.
With this order, promoters of Jaypee Infratech are out of the bidding race for the company.
Homebuyers can bargain between getting possession of their flats or getting their money back, said experts.
Money (Rs 7.5 billion) collected by Court from the promoters of Jaypee Infratech will be transferred to the NCLT.
Allahabad Branch of the NCLT is hearing the case. The petition in the Supreme Court was filed by homebuyers who opposed the insolvency proceedings, fearing they would lose their investment.
Source Business Standard