NEW DELHI: The National Company Law Tribunal (NCLT) appointed an insolvency professional on Thursday for Jaypee Infratech, providing thousands of buyers in Jaypee projects two weeks to raise claims related to their flats or plots as part of a court-driven attempt to put in place a revival plan for the developer’s much-delayed housing schemes in a maximum 270 days. Sources told TOI the insolvency professional will invite claims either over the weekend or on Monday as the law requires that claims be invited in prescribed forms within three days of NCLT’s order.

Flat buyers, as well as banks which have given them home loans, along with other lenders, creditors, vendors and employees will get time till August 24 to make their claims.

This is being seen as a test case for the real estate sector and millions of home buyers who have invested their life savings for their dream homes. The introduction of Rera and the insolvency code has brought hope for buyers who have not been handed over apartments even after a decade.

Among Jaypee’s pending projects is the 800-acre Wish Town in Noida’s Sector 128, which has 32,000 apartments. Of these, just 5,500 have been delivered. Jaypee has promised to complete another 6,000 flats by March 2018, 8,000 more in 2018-19 and the remaining by 2020. Jaypee did not respond to calls for its reaction to the development.

NCLT has appointed Anuj Jain as CEO of the company. Jain will have six months to revive the company, which can be extended for three months. But after that, assets will have to be sold to recover banks’ money. Jaypee Infratech is among the dozen companies identified by the Reserve Bank of India for a fast-track resolution through the new insolvency and bankruptcy code.

The company has a total debt of around Rs 8,000 crore. A banker said the company has four parcels of around 1200 acres each on Yamuna Expressway, besides land on the Noida-Greater Noida Expressway. But owing to poor market sentiment, it cannot monetise the land parcel by selling it. At the same time, banks are not ready to accept land against dues.

Projects on around 300 acres in sector 128 of Wish Town are being developed by Jaiprakash Associates Ltd (JAL). A company source said JAL is trying to complete the part of Wish Town which is being developed by it. The companies that have been put on RBI’s list are seen to be those that have so far failed to deliver on their promise to clear dues to banks. Jaypee has sold several assets, including its cement and power business, to reduce its massive pile of loans and raise funds to complete the long held-up real estate projects. While the law allows for liquidation if no plan is worked out within 270 days (including a 90-day extension), a banker said the idea is to try and revive the projects since a real estate scheme with thousands of homebuyers cannot be treated in the same manner as a steel or a power plant.

While a committee of creditors will collate the claims of lenders to Jaypee Infratech, it will also undertake a valuation of assets and liabilities of the company, including those of its subsidiaries.
“It is possible that in one tower there are unsold flats, and some where part payment has been received. It makes the task a little complicated. The insolvency professional will have to undertake a projectwise exercise and then consolidate it,” explained a source.

Unlike the past, when Jaypee told flat buyers that it is tying up funds, it will have to not just put down its intent during the tribunal-driven exercise but also come up with comfort and sanction letters from banks, and reveal all funding sources.
In the worst case scenario of liquidation of the company , the interest of flat buyers will come after that of the banks, which have extended loans to the company.