The Allahabad bench of the National Company Law Tribunal (NCLT) on Wednesday admitted insolvency proceedings against Jaypee Infratech Ltd, one of the 12 companies referred to the tribunal following the Reserve Bank of India’s (RBI) 13 June directive to banks, according to two people aware of the matter.
The NCLT bench accepted the petition moved by IDBI Bank, the leader of the consortium of lenders to the Jaypee Group company, and also approved the appointment of an interim resolution professional.
“Jaypee Infratech has withdrawn all the objections with respect to its admission under the Insolvency and Bankruptcy Code (IBC). This has been done keeping in mind the interest of all its stakeholders including the home buyers and depositors,” said Jaypee Infratech’s lawyer R.P. Agarwal.
Including Jaypee Infratech, various benches of NCLTs have so far admitted insolvency proceedings against 10 of the 12 identified companies. The decision is pending in case of Lanco Infratech Ltd and Era Infra Engineering Ltd.
A chartered accountant has been appointed as the interim insolvency professional. “The final decision regarding the appointment of insolvency professional will be taken after the creditors committee meets up after a month,” he added.
With the admission of Jaypee Infratech into insolvency proceedings, a 180-day moratorium— extendable by 90 days—has started, during which its board is replaced by the resolution professional. The professional discharges the functions of the board until the resolution is completed.
Jaypee Infratech has interests in road and real estate sectors. The company has constructed the 165km Yamuna Expressway, connecting Noida and Agra.
As on 31 March, the consolidated debt of Jaypee Infratech was over Rs7,922 crore with a negative interest coverage ratio, which means the company is not earning enough to repay its debt.
Jaypee Group companies such as Jaiprakash Associates Ltd and Jaiprakash Power Ventures Ltd have been under stress with escalating debt because of the issues plaguing the infrastructure space.
In case of Jaypee Infratech, the problem started after the 2013 order of the National Green Tribunal—that restrained the concerned authorities from giving a go ahead for the construction activity falling within the 10km radius of Okhla bird sanctuary pending approval from National Board of Wild Life—leading to delays in construction. This, coupled with falling revenue from the real estate business, contributed to the stress.
Jaypee Infratech has the right to develop an integrated township over 25 million sq. mt of land along the Yamuna Expressway, according to its fiscal 2016 annual report.
In the past two years, Jaypee Group, with interests ranging from power to real estate, cement, highways, fertilizer, hospitality and healthcare, among others, has been pushed by lenders to sell some of its best assets, and transfer ownership to pare debt.
In June, UltraTech Cement Ltd completed the acquisition of cement plants of Jaiprakash Associates Ltd for Rs16,189 crore.
Meanwhile, shares of Jaypee Group companies have risen sharply as investors expect a quick debt restructuring, providing relief to companies and lenders.
So far this year, Jaiprakash Associates has gained 217%, Jaiprakash Power Ventures 71% and Jaypee Infratech 166%.
