The National Company Law Tribunal (NCLT) has appointed an insolvency professional on Thursday for Jaypee Infratech. This move will provide thousands of buyers in Jaypee projects two weeks’ time to raise claims related to their flats or plots as part of a court-driven attempt to set up a revival plan for the developer’s much-delayed housing schemes in a maximum 270 days. The insolvency professional will invite claims either over the weekend or on Monday as the law requires that claims be invited in prescribed forms within three days of NCLT’s order.
The buyers, meanwhile, are waging a campaign on Twitter to draw the attention of government on their issue of delay in delivery of their flats.
Apartment buyers, as well as banks which have given them home loans, along with other lenders, creditors, vendors and employees have time till August 24 to make their claims. This is being seen as a test case for the real estate sector and millions of home buyers who have spent entire life savings in the purchase of their dream homes. The introduction of RERA and the insolvency code has brought hope for buyers who have not been handed over apartments even after a decade.
Among Jaypee’s pending projects is the 800-acre Wish Town in Noida’s Sector 128, which has 32,000 apartments. Of these, just 5,500 have been delivered. Jaypee expects to complete another 6,000 flats by March 2018, 8,000 more in 2018-19 and the remaining by 2020.
NCLT has appointed Anuj Jain as CEO of the company. Jain has been given six months’ time to revive the company, which can be extended for three months. But after that, assets will have to be sold to recover banks’ money. Jaypee Infratech is among the dozen companies identified by the Reserve Bank of India for a fast-track resolution through the new insolvency and bankruptcy code.
The company has a total debt of around Rs 8,000 cr. The company can easily pay this off by the sale of its four parcels of around 1200 acres each on Yamuna Expressway, besides land on the Noida-Greater Noida Expressway. Unfortunately, given the current poor market sentiment, it cannot monetise the land parcel by selling it. At the same time, banks are not ready to accept land against dues.
Jaypee has sold several assets, including its cement and power business, to reduce its massive pile of loans and raise funds to complete the long held-up real estate projects. While the law allows for liquidation if no plan is worked out within 270 days (including a 90-day extension), a banker said the idea is to try and revive the projects since a real estate scheme with thousands of homebuyers cannot be treated in the same manner as a steel or a power plant.
While a committee of creditors will collate the claims of lenders to Jaypee Infratech, it will also undertake a valuation of assets and liabilities of the company, including those of its subsidiaries.
In the worst case scenario of liquidation of the company , the interest of flat buyers will come after that of the banks, which have extended loans to the company.