Bankrupt Jaipee may leave 32,000 home buyers in the lurch

Jaypee Infratech is likely to offer buyers of its flats fresh deals to shift their bookings to its new property in Greater Noida even as the insolvency resolution professional (IRP) handling the Jaypee Infratech case has ruled out the possibility of home buyers getting refunds.

The insolvency proceedings initiated under section 7 of the Insolvency and Bakruptcy Code 2016 against Jaypee Infratech at the National Company law Tribunal (NCLT) has left around 32,000 home buyers in the lurch.

NCLT has now appointed Anuj Jain as the IRP to carry out the proceedings under the Insolvency and Bankruptcy Code, while the board of directors of the company will remain suspended.

With the Allahabad bench of the NCLT classifying Jaypee Infratech as insolvent on the petition filed by IDBI Bank after the developer defaulted on Rs526.11-crore loan outstanding to IDBI Bank, it has now become certain that home buyers who invested in Jaypee's projects will not get their money back.

The IRP, however, assured that efforts are being made to ensure continuation of project development.

Reports said Jaypee Infratech is offering its flat owners fresh deals to shift their bookings to its new property in Greater Noida.

A report in The Times of India also mentioned instances where an existing customer is being advised to take up a forthcoming project in the new property with an assurance that the amount already paid to Jaypee Infratech would be adjusted in the upcoming project.

Nevertheless, it's unclear how the existing flat buyers can avail withdrawal of their deposits, as it only provides discounts for delayed flat delivery.

In a statement released on Thursday, Jain requested home buyers to submit the related claim forms by 24 August, and the supporting documents subsequently, but before a resolution plan is filed.

IRP also clarified that the 24 August deadline for submitting of claims by home buyers will not be extended.

"The IRP has made no statement or commitment to any authorities or media representative suggesting that refund can be made to certain categories of flat buyers / projects," Jain clarified on Friday.

IRP made it clear that it is not a proceeding for Jaypee Infratech's liquidation. "This is a process during which steps are explored for restructuring of the company," he said.

He also clarified that the company's operations are being continued as a going concern and there would not be any disruption in its day-to-day operations.

A total of 27 projects in three Noida land parcels of Jaypee Infratech will come under the purview of the Corporate Insolvency Resolution Process (CIRP), according to another FAQ released on Friday.

IRP will now come up with a resolution plan, which will have to be approved by the committee of creditors (CoC), including financial institutions, public sector banks and other lenders. The CoC is likely to be set up by 9 September.

IRP will get 270 days to turn around the company's finances and see if a resolution of the company's debt is possible. In case this is not possible, the company's asset will be liquidated.