Six years of IBC - impact on Real Estate sector

Six years of IBC 2016 www.infralive.com 41 InfraLIVE January 15, 2023 its insolvency process in August 2017. They are all waiting patiently for a glimmer of hope. JaiprakashAssociates Ltd State Bank of India (SBI) has filed a petition for triggering CIRP a g a i n s t c o n s t r u c t i o n f i r m Jaiprakash Associates Ltd (JAL), the holding company of JIL at NCLT, Allahabad for a debt default of Rs 6,892 crore on September 20, 2022. The case CP ( IB) No . 108/2022 was registered on November 22, 2022. JAL (incorporated in 1995) was formed in 2004 through the amalgamation of Jaiprakash Industries with Jaypee Cement. JAL is involved in cement manu- facturing, engineering and con- struction, expressways, real estate, hospitalities, and wind/ thermal power plants all over India. There are 42 RERA registered residen- tial/ commercial projects of JAL as of November 30, 2022 with tens of thousands of flats/ apartments. December 10, 2015 is notified as the date of debt default by the National E-Governance Services Ltd (NeSL). JAL, a flagship firm of the debt- ridden Jaypee Group, was included in the Reserve Bank of India's second list of 26 big loan defaulters in June 2017. In September 2018, the ICICI Bank filed an insolvency petition. According to the report, the said matter has not been admitted and getting adjourned every time it gets listed. Currently, JAL has a huge outstanding debt estimated to be around Rs 26,000 crore. It has tried to convince its lenders for restructuring outside the IBC process, but without any success. The SBI has also proposed to the court to appoint Bhuvan Madan as the IRP for the case. In total, 32 banks have exposure to JAL which include ICICI Bank, Axis Bank, Bank of Baroda, IDBI Bank and CanaraBank. SupertechLtd NCLT, New Delhi has admitted the CIRP on March 25, 2022 against Supertech Ltd, a prominent real estate developer, on a petition filed by Union Bank of India (UBI), one of the financial creditors, for default in making payment of loan of Rs 432 crores advanced for development of their Eco Village II project at sector 16B, Greater Noida West. NCLT appointed Hitesh Goel as IRP and issued moratorium order under section 14 of IBC 2016. As a result, fate of 27 residential/ commercial/ plotted real estate projects located in Gautam Budha Nagar and Meerut districts with tens of thousands of homebuyers/ consumers came under insolvency proceedings. On an appeal filed by RK Arora, suspended director of Supertech Ltd, before the NCLAT, he claimed that the UBI had extended the credit facilities only for the projects - Eco Village II Phase-I & Phase-II; Eco Village III; and Romano Project. The Appellant has already paid an amount of Rs 149 crore to the bank. He claimed that the CD has been running a large number of projects, substantial number of projects have already been com- pleted, the existing promoters are willing to complete the projects in a time bound manner along with discharging the liabilities of all the financial creditors, homebuyers and even operational creditors. He claimed that CD had sufficient receivables with positive net worth and it requires only last mile funding for completing construc- tions which will result in genera- tion of adequate cash-flows to meet out all obligations. The Appellant also claimed that a strategic partner Star Realcon Pvt Ltd has agreed in-principle to infuse Rs 300 crores to complete the stalled project. Further, Varde Partner, a Grade A fund has also shown inclination to infuse substantial fund. The Appellant also submitted detailed Settlement cum Resolu- tion Plan for the project comple- tion. The IRP in his status report has submitted that he has received claims of Rs 15,175 crores from 13,484 creditors of the CD. The IRP also pending beforeNCLAT and the parties agreed that those appeals may be transferred to the Apex Court and be heard along with the aforesaid appeals of the associa- tions and homebuyers to avoid the likelihood of further delay in the matter. Accordingly, the Apex Court ordered transfer of the mentioned appeals for analogous hearing with the matters pending before them. By way of interim order, while staying the operation of the impugned order dated April 22, 2020, the Apex Court had provided that the IRP shall continue to manage the affairs of the subject company (JIL). It is, therefore, apparent that the resolution plan, as approved by the CoC on Decem- ber 17, 2019 and the order dated March 03, 2020, as passed by NCLT approving the resolution plan with certain directions and modifications, and the interim order dated April 22, 2020, as passed by NCLAT in the appeal filed by the resolution applicant NBCC, providing for composition of an 'InterimMonitoring Commit- tee' while implementing the resolution plan, were put up before the Apex court for resolution. On March 24, 2021, the SC rejected the NBCC plan and asked the IRP to start the CIRP process all over again. Exactly two months later, the CoC approved Suraksha's resolution plan, which was submit- ted to NCLT for approval on July 7, 2021. Since then, this case has been pending with the Tribunal for approval of the resolutionplan. Homebuyers still in queue for uncertainoutcome Around 22,000 homebuyers have been waiting for their flats for over a decade. If NCLT does not expedite the hearing around the r e s o l u t i o n p l a n s , t h e s e homebuyers will be subject to unending pain and trauma. For the thousands of homemakers waiting for a definitive closure, there seems to be no light at the end of the tunnel. If anything, future look as bleak as they did when JIL started