Suraksha Realty Raises Objection to Lenders, IRP for not putting Highest Bid on Vote.
Suraksha Realty, one of the two bidders for insolvent developer Jaypee Infratech, has raised objections to the Interim resolution professional (IRP) and the Committee of Creditors (CoC) of the beleaguered company for putting both the bids of NBCC and Suraksha on vote simultaneously instead of the highest one.
On Saturday, lenders of Jaypee Infratech decided to put both bids to acquire the bankrupt realty firm at the same time instead of putting the highest bid on the vote first. The voting process for 22,000 homebuyers and lenders started on Tuesday and will conclude on December 16. This is the third round of the bidding process initiated on the direction of the Supreme Court. In earlier two instances, the highest bid was put to vote first.
On Tuesday, Suraksha Realty wrote to both IRP and CoC to express its displeasure. In the letter, ET reviewed Suraksha Realty has highlighted that their bid was the highest based on parameters that maximizes value for lenders as well as homebuyers.
Suraksha, in its letter to IRP and CoC, has drawn attention to Regulation 39(3) of Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 in support of its objection.
“’The committee shall evaluate the resolution plans received under sub-regulation (1) strictly as per the evaluation matrix to identify the best resolution plan and may approve it with such modifications as it deems fit’… In view of this regulation, we request you to follow the same and put to vote the resolution plan which scores higher as per the evaluation matrix” Suraksha Realty said in its letter.
An assessment of the two revised bids of Suraksha and NBCC to acquire Jaypee Infratech’s assets conducted by RBSA Advisors has shown that the new resolution plans of Suraksha Realty has received more score as against that of NBCC on various parameters such as delivery of apartments and compensation to secured financial creditors as well as homebuyers.
According to the valuation matrix, gross value of NBCC’s offer is Rs 5,802 crore, while Suraksha Realty’s offer is valued at Rs 6,440 crore.
RBSA Advisors, the corporate valuation firm, has undertaken the bids evaluation advisory at the behest of Jaypee Infratech’s interim resolution professional (IRP) Anuj Jain and the CoC.
The report has pointed out that state-run NBCC, in the resolution plan for Jaypee Infratech, has mentioned that farmer’s compensation of nearly Rs 1,689 crore, if it arises, shall be borne by ultimate end users. Jaypee Infratech has sub judice claim of the Yamuna Expressway Industrial Development Authority (YEIDA) of Rs 1,689 crore of additional compensation to farmers.
NBCC, in its resolution plan, proposed that in the event this amount needs to be paid to YEIDA, the same will have to be paid by homebuyers, bankers, land owners to whom the land is already sold or will be given hereafter under the resolution.
The report also highlighted that NBCC proposed to transfer the expressway to lenders, as part of its resolution plan, with a debt of Rs 2,200 crore, which will be a liability of lenders and it need to be serviced by them. “In our view, this is not part of the consideration to lenders of Jaypee Infratech from own sources of NBCC,” the RBSA Advisory’s valuation and assessment report said.
According to experts, the valuation of expressway at Rs 4,484 crore is on higher side as the actual offers may not be more than Rs 3,000 crore.
Both NBCC and Suraksha revised their bids last week. As part of its revised bid, NBCC advanced the date of completion for the projects to 3.5 years from 4 years earlier. It also increased land offered to lenders to 1,526 acres from 1,425 acres.
NBCC offered penalty of Rs 5 per sq ft a month for any delay in completion of the projects after the scheduled 3.5 years and grace period of 12 months. However, it is not offering any compensation for past delays. Suraksha will be paying Rs 250 crore to homebuyers as compensation for earlier delay and Rs 10 per sq ft for any delay on their part beyond the scheduled three years and grace period of 9 months.
Suraksha has upped its offer by increasing its cash offer to lenders to Rs 190 crore from earlier Rs 25 crore. For homebuyers, as delayed compensation, it has now offered Rs 250 crore from specified Mirzapur land, as against Rs 100 crore from unidentified land earlier.
Additionally, it has offered another Rs 250 crore if 858-acre land case is decided in favour of Jaypee Infratech. The Mumbai-based realty developer has now offered 2,320 acres of land instead of 1,900 acres proposed earlier.
About 32,000 home buyers were left in the lurch after the Allahabad bench of the NCLT classified Jaypee Infratech as insolvent on the petition filed by IDBI Bank under Section 7 of IBC, 2016. Jaypee had defaulted on a Rs 526-crore loan by the bank. In 2017, the NCLT admitted the application of an IDBI Bank-led consortium seeking resolution of Jaypee Infratech’s debt under the Insolvency & Bankruptcy Code. Jaypee Infratech has a debt obligation of over Rs 9,800 crores to the IDBI Bank-led consortium.
