Delhi

NBCC to rescue 30,000 Jaypee homebuyers?

 

NBCC may just emerge as the saviour for nearly 30,000 homebuyers who are living under the fear of never getting the dream home they booked with the Jaypee Group.  The blue-chip Government of India Navratna Enterprise operating as the government's engineering and construction undertaking, is in initial and informal talks with the Finance Ministry as well as lenders to Jaypee Infratech to complete the construction of 27 stalled residential projects in Noida and Greater Noida.

 

For doing this job, NBCC wants Jaypee Infra's land parcels adjacent to the Yamuna Expresswaybetween Noida and Agra that can be easily monetised in the future. NBCC is also looking to use Jaypee's homebuyers' outstanding receivables to fund the construction of the 27 projects and also be paid a portion from unsold inventory of flats.

 

And to get banks on board, NBCC is believed to be offering them a percentage of revenues it earns from the monetisation of land currently owned by Jaypee Infratech. NBCC is also expected to offer the banks a share in the surplus proceeds from homebuyers outstanding receivables and sale of unsold inventory in these Jaypee projects. This in effect means a share in what is left once the 27 projects of Jaypee projects are completed.

 

This is all at an early stage, with NBCC still having to identify the land parcels it would want in lieu of construction. It has also not yet estimated how much the cost of construction would be.  Also, the insolvency resolution professional will have to be kept in loop if all of this has to happen.  As of now, neither the banks nor NBCC have discussed this with Anuj Jain, the apointed IRP in this case, however. The Jaypee case is being seen as an acid test for the new insolvency law.

 

“This would indeed be a welcome move, as it would allay the fears of troubled homebuyers, that are already facing an uphill task of seeking their claims in the insolvency process, with potentially being fairly low in the priority for payment of creditors’ dues. Needless to state that this situation gets compounded by the lack of clarity on their status as an operational, financial or other creditor under the Insolvency Code and the pending litigation before the Supreme Court,” said Vaibhav Kakkar, Partner, Luthra & Luthra Law Offices.

 

The Finance Minister Arun Jaitley has publicly expressed sympathy for Jaypee's homebuyers and said those that have paid for flats must get possession. The industry also wants clarity if this is just a one off or could such a resolution mechanism be replicated in other instances too.

 

"It would be good if such an intervention is an integral part of the resolution process. it should be available to other real estate projects facing insolvency resolution rather than it being a knee jerk reaction to the public attention that Jaypee Infra insolvency has attracted," said Niraj Kumar, Partner, DSK Legal.
 

Written by The Realty Paper


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