According to Gaur, the judgment simultaneously provides a legal right or entitlement to promoters of Jaypee Infratech to object to any resolution plan which calls for a haircut for the creditors. “…as it has the effect of impinging on the rights of the guarantors,” according to the letter.
The Jaypee Infratech insolvency process is currently in the midst of a fourth round of bids with two firms — NBCC India Ltd. and the Suraksha Group — in the fray. At first, creditors deemed NBCC’s proposal as non-compliant with provisions of the IBC and decided to vote on Suraksha’s plan. NBCC, however, challenged this and creditors are now set to review their decision.
Jaypee Infratech is a rarest of the rare cases where the assets of the company are higher than its liabilities, Gaur said.
“Therefore, it is not a case wherein the lenders by an involuntary process, i.e. by operation of law (insolvency proceedings), are compelled to accept one of the resolution plans and settle with their borrower (corporate debtor) after taking huge haircuts,” Gaur said.
Gaur intends to repay Rs 9,783 crore owed to banks and financial institutions through upfront payment, land swaps and long-term debentures worth Rs 12,500 crore. He proposes to deploy Rs 1,650 crore toward construction of homes, out of which, Rs 400 crore will paid upfront. The promoter also intends to spend up to Rs 2,987 crore toward compensation for delayed delivery of homes.
Additionally, Gaur has proposed to repay fixed depositors and Yamuna Expressway Infrastructure Development Authority in full.
The promoter said his proposal does not envisage any haircut for financial creditors. Even if any creditor feels that there is an implied haircut, Gaur said that it will be made good within five years of acceptance of the plan.
“Voting on a non-compliant plan of a resolution applicant and accepting haircut despite knowing the worth of assets of JIL and ignoring the offer of its promoters is not only imprudent but will set an extremely wrong precedence,” Gaur said in his letter.