The turmoil that the initiation of insolvency proceedings against Jaypee Infratech by banks threw homebuyers into is set to get bigger. Reports have it that the National Company Law Tribunal (NCLT) may admit insolvency proceedings against group companies of another prominent developer Amrapali.
Media reports indicate that the process of corporate insolvency resolution under the Insolvency and Bankruptcy Code is likely to be initiated against three Amrapali group companies – Noida's Silicon City and Greater Noida-based Ultra Home Construction and Amrapali Infrastructure – on the plea of Bank of Baroda.
The Time of India cited a bank official as saying that the National Company Law Tribunal's principal bench had reserved its verdict on the issue and may pronounce it any day now.
The company has said that it has prioritised delivery to Silicon City buyers. An Amrapali official said that in all the three companies, the bank had outstanding amounts of much more than Rs 1,00,000, the minimum cutoff for initiation of insolvency proceedings. The plea for insolvency proceedings, he said, is therefore likely to be accepted despite the company managements opposing the move.
Bank of Baroda has an outstanding amount of Rs 56 crore in principal in Silicon City. Other lenders to the company are OBC and Bank of Maharashtra.
Banks had given around Rs 300 crore in principal to the company which has returned Rs 305 crore so far and still owes Rs 156 crore. In addition, Silicon City owes the Noida Authority around Rs 550 crore. Besides this, JP Morgan also had also extended a secured loan of Rs 150 crore to the company.
The company maintains that it will provide possession to 500 Silicon City flats by December 2017. The company claims to have offered possession to 2,500 homebuyers and still has 1,000 flats that are pending for pover three years now.
Amrapali claims that delays in Silicon City have been mainly due to stoppage of work due to various court orders and farmers’ agitations. The report cites a company source as saying that it is committed to finishing the entire project and offer possession in the next one year.
Amrapali says it intends to do so with internal cash flows such as receivables from buyers. It has also around 1.5 million square feet FSI to sell to meet other liabilities, it said.