Lenders move tribunal to get Jaypee Infratech's revival plan moving
With all crucial decisions held up for over two months due to a legal tangle, Japyee Infratech lenders have moved the National Company Law Tribunal (NCLT), the designated bankruptcy court, to seek the passage of key resolutions by the committee of creditors — comprising home buyers, banks and fixed deposit holders — if a majority of the members agree to the proposal instead of two-thirds stipulated in the Insolvency & Bankruptcy Code (IBC). The insolvency resolution process of the company, which is yet to deliver close to 25,000 plots, villas and apartments, has come to a “standstill” as a large number of home buyers have not voted for the resolutions and the decision to abstain is treated as negative vote. This has meant that basic decisions such as the appointment of a full time resolution professional to find a new buyer for the company, call for bids and even pay vendors and employess cannot be taken. In the resolution to appoint a resolution professional, for instance, only 17.2% of the home buyers had voted in favour of the move, while all the lenders with a combined cote share of 41.7% backed the proposal. Left with no choice lenders have had to move the NCLT’s Allahabad bench for interpreting the law as they believe that the current impasse could lead the avoidable situation of liquidation. The Supreme Court, which ordered a restart of the resolution process after hearing the case for a year, had said that liquidation was not an option. While the issue had been flagged before the ministry of corporate affairs as well as the Insolvency and Bankruptcy Board of India, no solution has been found by the two agencies, prompting banks to move the Tribunal. While the matter has been listed before the bench for a while a final order is awaited, said sources. Under IBC, the resolution process has to be completed within 270 days of initiation. Already over two months are over in the case and there are nine months to go with so far the interim resolution professional having decided to call for expression of interest, where five entities — NBCC, L&T Infrastrcture, Suraksha ARC, ICube and Kotak Group — have show initial interest. The lenders have relied on an order passed by the NCLT’s principal bench to argue for interpreting the IBC to allow for majority of the votes to decide on key resolutions. As reported first by TOI on October 2, the bench had ruled that it would go ahead and appoint a resolution professional even though only half the members of the committee of creditors had voted for resolution moved, against the requirement of 66% backing it. The tribunal had observed that the idea was to prevent liquidation and go for resolution, which is the objective of the two-year-old IBC.
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