Kotak Investment may team up with co-applicants for RP

Earlier, Lakshdeep, Adani Group and a joint venture between Kotak Investment Advisors and Cube Highways, had submitted the resolution plans.

Kotak Investment Advisors may team up with co-applicants for submitting a resolution plan for insolvent Jaypee Infratech Ltd (JIL). State-run NBCC, Sudhir Valia-promoted Suraksha ARC and Cube Highways & Infrastructure are the three other firms that have submitted expression of interests (EoI) for JIL.

Kotak is believed to have bounced off the proposal — to rope in a partner — with lenders at a recent meeting. The lenders are understood to have okayed the proposal.
“There is no such restriction if two resolution applicants come together and submit a plan, combine their resources which is more formidable and attractive,” the minutes of the January 17 committee of creditors (CoC) meeting, quoting legal advisors to the resolution professional (RP), showed.
“Kotak is highly uncomfortable in taking any equity stake in JP Infra and only want to fund the capital since Kotak is an institution, it can’t take any risk nor it can represent people on the Board,” the minutes of the CoC meeting noted.

Kotak has also sought clarity on whether existing shareholders can continue in the company. Lead banker IDBI clarified that , “As per IBC (Insolvency and Bankruptcy Code), existing shareholders cannot continue and change of management needs to take place and lenders are not in the business of holding equity in the company and hence, it can not be considered.”

JIL resolution professional (RP) Anuj Jain also countered Kotak’s contention in the meeting saying, “The resolution applicant is expected to take ownership of assets as there is long standing obligation of asset where homes need to be constructed and delivered to people and a 24X7 toll road needs to be operated.”

On behalf of Kotak Investment Advisors, Kotak Realty CEO Vikas Chimakurthy attended the lenders meeting. An email sent to him seeking comments did not elicit any reply.
In the meeting, lenders extended the deadline for submitting resolution plans to February 15 from January 27. This was done at the request of the majority of the applicants.

The National Company Law Tribunal (NCLT) had on August 9, 2017, admitted IDBI Bank’s plea for initiation of corporate insolvency resolution process (CIRP) against JIL for defaulting on a `526-crore loan. However, a resolution eluded the firm within the stipulated time-frame as lenders were not happy with the “too low” bids.

On a writ petition filed by the home buyers, the Supreme Court had on August 9, 2018, directed JIL’s resolution professional Anuj Jain “to follow the provisions of the insolvency code afresh in all aspects.” The apex court extended the insolvency process of Jaypee for another 180 days.
Earlier, Lakshdeep, Adani Group and a joint venture between Kotak Investment Advisors and Cube Highways, had submitted the resolution plans.

Consequently, Sudhir Valia-promoted Suraksha ARC had emerged as the front-runner to acquire JIL. However, in May, 2018, lenders of JIL rejected the `7,350-crore bid by Suraksha as they found it “too low”.

According to a note prepared by IDBI Bank, Jaypee’s largest lender, the company’s actual value stands at Rs 17,111 crore, while its distress value is pegged at `14,548 crore. JIL has `9,000 crore outstanding to various banks.

JIL’s assets also include 25,000 apartments that are under construction and 3,000 acres of land parcels, mostly along with the expressway.


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