The Supreme Court, which last week stayed Jaypee Infratech's move to get itself declared bankrupt through insolvency proceedings has now directed holding companies of Jaypee Infratech to deposit Rs2,000 crore by 27 October, to ensure homebuyers their due.
The latest development in an ongoing suit where homebuyers have challenged the company's move to declare itself bankrupt, will give some respite to more than 30,000 buyers of Jaypee Infratech in Noida and Greater Noida who are worried that the insolvency proceedings would leave them in a lurch.
The apex court had, last week, stayed insolvency proceedings against Jaypee Infratech, which would involve a restructuring of the company, including financial restructuring, involving write downs of external liabilities..
In the case of Jaypee, the National Company law Tribunal (NCLT) has appointed an Interim Resolution Professional (IRP) to carry out the proceedings under the Insolvency and Bankruptcy Code.
The IRP has six months to revive the company by paying back debts to financial creditors and homes to buyers.
The period can, however, be extended by three more months. If the IRP is unable to revive the projects, the company will be liquidated and its assets sold to recover money, which will be distributed among creditors, including homebuyers.
JIL was among the 12 companies that the Reserve bank of India had referred to the NCLT and asked banks to launch insolvency proceedings for recovering dues. Jaypee Infratech said on August 25 it will hand over possession letters to flat owners who have invested in projects that are ready. In August, homebuyers moved the Supreme Court against the insolvency proceedings to protect their interests.
The corporate insolvency resolution process has been initiated only against Jaypee Infratech, one of the two promoters of the Jaypee Group which is developing 27 projects, mostly in Noida and Greater Noida.
JIL's consolidated debt stood at over Rs7,900 crore with a negative interest coverage ratio as of 31 March, which goes to show that the company is not earning enough to repay its debt.
The IRP, Anuj Jain, however, said construction at Jaypee Infratech housing projects will continue as usual, but did not confirm that the company has adequate funds to finish the project. Jaypee Infratech had last month said it will hand over possession letters to flat owners who have invested in projects that are ready.
IDBI Bank, the leader of a consortium of lenders to the company, had moved a petition after the real estate company defaulted on a Rs526-crore loan and the case was admitted by the Allahabad bench of the (NCLT).