Further, these sources say that Lakshadweep had also asked for the waiver of statutory dues which the lenders found was beyond their purview.
Lakshadweep also offered to take up to five years to complete projects, a timeframe that did not go down well with the committee of creditors (CoC).
Of all the lenders, almost 94 per cent of them voted against or did not vote on the resolution plan. Only one of the six creditors voted in favour.
However, caught between the devil and the deep sea, the creditors did not have too many choices before them.
Meanwhile, Jaypee Associates also offered an alternative plan and pleaded with the Supreme Court to direct the resolution professional and CoC to consider it.
While Jaypee’s plan was better in many respects, lenders felt that its credentials weren’t good enough for them to consider it. Further, the amendments to the insolvency code bar promoters of defaulting companies
from placing bids.
The builder may need up to Rs 65 billion to complete construction, while they only have Rs 40 billion in receivables from customers, leaving a shortfall of Rs 25 billion. Jaypee Infratech is currently investing Rs 500 million a month to complete these.
The supreme court had ruled that revised bids should be called for, or the company would go for liquidation.
Home buyers' views
This curious case has a third dimension-- those who have booked houses with Jaypee. While banks and operational creditors were all familiar with the insolvency process, home buyers of Jaypee were taken by surprise when the company went into insolvency.
These home buyers feel that a ‘known devil is better than an unknown one’. Here again, the section 29 A of the Insolvency and Bankruptcy Code proved to be a barrier.
The Supreme Court's interim order that revised bids should be invited could be a lifeline for these home buyers as the only other option that it left is liquidation.
The law states that any company that does not come up with a resolution plan would be liable for liquidation. Liquidation of Jaypee's assets would mean home buyers being left in the lurch and may have to take a haircut.
Home buyers are not at par with lenders so far as claims on insolvent companies
are concerned. A committee of ssecretaries has recommended to the government that they should be made equal to lenders, but these suggestions are still pending with the government.
Among the 12 cases in the first list released by the RBI, Jaypee is the odd-one-out, being the only one to have a direct connection with the consumer.