NEW DELHI: Fearing liquidation proceedings as the insolvency resolution process for debt-ridden real estate giant Jaypee Infratech Ltd (JIL) could not be completed within the statutory lime period of 270 days, hundred of homebuyers approached the Supreme Court seeking to stop the dissolution process.
The apex court had in August last year ordered commencement of insolvency proceedings afresh against JIL before the National Company Law Tribunal, Allahabad, and asked the interim resolution professional (IRP) to seek fresh bids from other companies to take over the realtor.
Under the Insolvency and Bankruptcy Act, corporate insolvency resolution process must be completed within 270 days and in case of failure, liquidation starts.
As the time limit of 270 days ended on May 6, the homebuyers rushed to SC through advocate Ashwarya Sinha to stay the liquidation process. Though the NCLT in Allahabad has posted the matter for May 21, providing some breathing space to investors and likely bidders, the uncertainty has forced homebuyers to move the Supreme Court seeking protection of their interests.
“If no resolution plan is accepted till May 6 (the date has now passed), JIL will automatically go into liquidation, thereby leaving thousands of homebuyers in the lurch. Liquidation of the company will only be in the interest of banks who will be able to recover the money lent by them to the debtor,” the petition said.
It said liquidation would defeat the purpose of safeguarding the interest of 32,000 homebuyers who had paid around Rs 14,000 crore to JIL. “The provisions stipulate that in case of distribution of the proceeds, secured creditors will be given preference over an unsecured creditor. However, since no amendments have been brought forth in the definition of secured creditors to include homebuyers, they continue to be regarded as unsecured creditors,” it said. Meanwhile, one of the creditor banks IDBI moved an application before NCLT, Allahabad, for extension of time to allow insolvency proceedings to go on that has resulted in the case being scheduled for May 21.
Citing Amrapali and Unitech cases, in which forensic auditing of the companies was ordered, homebuyers pleaded for a similar order against Jaypee to track diversion of funds which sparked financial issues.