After major reforms such as the Real Estate Regulation and Development Act (RERA) and the rationalisation of the Goods and Services Tax (GST), the likely resolution of the Jaypee Infratech Ltd (JIL) insolvency case will be another major development to boost the home buyer’s confidence, more so in the subdued realty market of the national capital region, market experts said.
“If this resolution takes place successfully, it would be a confidence booster because Jaypee has been one of the most highlighted cases. After RERA and GST, there is lot of transparency in the segment, and this will definitely further give the end users a lot of confidence, that their money is very safe,” said Asha Singh, vice president, marketing at 360 Realtors.
The Committee of Creditors (CoC) of Jaypee Infratech would finalise on April 30 who gets the insolvent JIL and the responsibility to build over 20,000 incomplete flats.
According to sources, among the fresh bids of National Buildings Construction Corp (NBCC) and Suraksha Realty, that of NBCC got rejected on Friday as the CoC found the offer to be conditional and subject to approvals from several government departments.
Conditional bids are not allowed under the insolvency law.
Now, on April 30, the CoC would put Suraksha’s bid to vote and sources say the bid might go through.
A successful resolution and timely completion would mean that under any circumstance the home buyers’ money would be safe and developers too would understand that they have to play a fair game, analysts said.
The realty firm has an outstanding debt of nearly Rs. 9,800 crore and over 22,000 of its flats in Noida remain incomplete. The deadline for resolving the JIL insolvency case is May 6.
Meanwhile, the Adani Group is also raring to enter the ring and sent an expression of interest to the CoC but eventually did not submit its resolution.
Jaypee promoters also persuaded the home buyers to support the company in withdrawing the case from the insolvency process under Section 12 A of the Insolvency and Bankruptcy Code (IBC).
In a letter written to the anguished home buyers last week, Manoj Gaur, chairman, Jaypee Group, promised to construct the incomplete flats in four years, offered 2,000 equity shares out of promoter holding and also pledged to set up an “overseeing committee” consisting of a retired Supreme Court judge.
Mr Gaur also promised a “minimum” haircut to banks in terms of their loan recovery.
Further, as per the resolution plan of Jaypee Associates Ltd (JAL), the group company of which JIL is a subsidiary, JAL would infuse Rs. 1,500 crore “up front to cover deficit in cost of completion of homes”.
It also said that 100 acres of unused land shall be preserved for the need of funds, if needed, in future. “100 acres of unencumbered land shall be preserved for unforeseen circumstances. No development/sale/mortgage on this 100 acres will be undertaken for three years or completion of last home (out of 20,524) whichever is later.”
Although several home buyers raised concerns that the lenders have turned in favour of JAL, as they have assured minimum or no haircut, sources say now the lenders may zero in on Suraksha and vote for its bid on April 30.C
If this resolution goes through, the developers also would not take home buyers for granted any more, realty experts said.