Homebuyers swing Jaypee CoC to reject bankers’ moves
Jaypee Infra’s homebuyers have been given considerable leverage as they are now part of the Committee of Creditors (CoC) to the insolvent firm.
In a meeting held on October 17, the CoC rejected the appointment of Vijaykumar Iyer and Deloitte Touche Tohmatsu India to assist with the resolution process of the company.
The most significant aspect of the voting pattern, documents show, is that decisions that bankers were comfortable and content with were rejected (through abstention) by the homebuyers. This signifies a clear shift in the power dynamics between different groups of financial creditors, namely Jaypee's bankers and the homebuyers.
The meeting and subsequent voting was conducted over six issues, including the appointment of Iyer as the 66 per cent requirement Resolution Professional to according to the Section 28 of replace the Interim Resolution the Insolvency and Bankruptcy Professional, Anuj Jain, who Code (IBC) rules. was earlier appointed to oversee Only one matter — the invitation the corporate insolvency resolution for expression of interest process of the company. — was approved by the CoC as
According to filings with Section 21 of the IBC requires a stock exchanges, the appointment minimum of 51 per cent of the of Iyer and Deloittee to votes in favour of publishing an assist with the resolution EoI. Jaypee Infra's bankers, process, respectively, received including IDBI Bank, have around 57 per cent of the CoC's claims worth ~97.83 billion vote, which is below the minimum against the corporate defaulter and all of them assented to appoint Iyer. However, the majority of the homebuyers abstained from voting (41.15 per cent) and only 15.53 per cent of them assented to Iyer's appointment.
A similar trend took place in the voting pattern when it came to appointment Deloitte to assist with the resolution process. All banks had assented to the firm's appointment, while 41.15 per cent of the homebuyers abstained from voting.
After a recent Supreme Court (SC) ruling, homebuyers of insolvent real estate developers such as Jaypee Infra were allowed to participate in the CoC as financial creditors.
Prior to the ruling, homebuyers were classified as operational creditors in the CIRP of a corporate defaulter, and were subjected to any and all decisions that were made by bankers and lenders.
Jaypee Infra's customers had made the necessary down payments and premium payments on flats in a number of housing projects, but were left in the lurch as the company consecutively delayed the delivery of the property to the rightful owners/buyers.
The SC had ruled that the insolvency process for Jaypee Infra had to be 'restarted' as all decisions that had been made by the earlier CoC (without the representation of homebuyers) were void, in light of their ruling. Jaypee Infra's homebuyers have filed claims worth ~136.6 billion.
The third matter that was voted on was the proposed fee of the resolution professional, pegged at ~4.5 million per month, which was rejected. Similarly, the fourth issue on related party transactions and the fifth issue on the acceptance of the resignation of seven directors of the corporate debtor were also rejected.