Shares of Jaypee Infratech, a part of the debt-ridden Jaypee group, today hit lower circuit with reports suggesting that the government was exploring if it was legally tenable under insolvency laws to sell its assets to raise money to complete pending housing projects of the company.
Hundreds of home buyers were left in a lurch after the Allahabad bench of the National Company Law Tribunal (NCLT) on August 9 admitted IDBI Bank’s plea to begin insolvency proceedings against Jaypee Infratech for defaulting on Rs 526 crore loan.
According to a Finance Ministry official, the ministry will have to first discuss with the Corporate Affairs Ministry if the bankruptcy code provides any legal ground for sale of other assets of companies to fund completion of pending projects.
The court had appointed Anuj Jain as the Interim Resolution Professional (IRP) to carry out the proceedings under the Insolvency and Bankruptcy Code. He has been given 6-month time to revive the company by paying back debts to financial creditors and homes to buyers. The period can be extended by three more months, if needed.
If Jain is unable to revive the projects, assets of Jaypee Infratech will be sold and recovered money will be distributed among creditors including homebuyers.
What next for homebuyers?
The NCLT has asked the homebuyers to file their claims by August 24. Two companies of Jaypee group – Jaypee Infratech and Jaypee Associates — are developing projects in Wish Town Integrated township.
Homebuyers who have purchased flats through Jaypee Infratech need to approach the Interim Resolution Professional (IRP) for refund of their money in case revival of the company fails.
If the revival efforts fail, the IRP will be entitled to distribute funds giving banks and financial lenders highest priority and then the buyers. Those who fail to file claims will get refunds only in the end depending on the availability of funds.
If a buyer is unable to file the claim in person, anyone from the family can approach the IRP with all documents for refund. Though filing claims in a group or through buyers associations is a preferred option, a buyer can also file a claim individually.
The required documents are: Form C, a Rs10 stamp paper, an affidavit detailing the flat number along with proofs of payments made.
Japyee Infratech is among the 12 big corporate loan defaulters against whom bankruptcy proceedings has been initiated under a new law. Other companies against whom such proceedings has been initiated include Bhushan Steel, Bhushan Steel and Power, Electrosteel Steels and Lanco Infratech, Alok Industries and Jyoti Structures.
The company is into road construction and real estate business. It has constructed the Yamuna Expressway, connecting Delhi-Agra. The biggest incomplete project of Japyee is the mammoth Wish Town project in Noida, on the outskirts of the national capital.
The company has reportedly handed over only 5,500 flats out of the proposed 32,000 flats and 3,000 plots across 800 acres along the Noida-Greater Noida Expressway. The project has 305 towers, of which 250 are incomplete.